Events to Look Out for Next Week

The ECB joined the rate hike club with its first hike in over a decade and the announcement of a “Transmission Protection Instrument,” a TPI. Next on the agenda is the Fed, with beliefs that the signs of slowing growth will limit Fed action going forward after a projected 75 bp boost next week. Hence less aggressive action is expected from the FOMC. The economic agenda will be massive as it includes German IFO, US Consumer confidence, Durable Goods, GDP and PCE, Inflation out of Australia and CAnadian GDP.

Have a look at the most important events of the coming days in our usual weekly publication.

Monday – 25 July 2022

IFO Business Climate, Assessment & Expectations (EUR, GMT 08:00) – The German IFO business Climate is forecasted to decline to 90.5 in July from 92.3.

Tuesday – 26 July 2022

CB Consumer Confidence (USD, GMT 14:00) – Consumer confidence is expected to fall to a 17-month low of 96.0 from 98.7 in June, versus a 12-month low of 105.7 in February. The present situation index is anticipated to slip to a 15-month low of 140.0 from 147.1 in June. Confidence is being pushed down by soaring prices with supply chain disruptions, the war in Ukraine, huge mortgage rate gains, stock price declines, and the ongoing pull-back in the 2020-21 confidence lift from stimulus.
New Home Sales (USD, GMT 14:00) – A -3.7% June dip is forecasted for new home sales to a pace of 670k from 696k in May, versus a 9-month high of 839k in December. We expect a 665k Q2 pace for new home sales, after a 779k rate in Q1. Yet, the -14.4% May plunge in housing starts suggests that surging mortgage rates likely are disrupting builder confidence, as also gauged by the NAHB housing index decline to a 2-year low of 67 in June.

Wednesday – 27 July 2022

Consumer Price Index (AUD, GMT 01:30) – Annual Inflation in Australia is currently running at 5.1%, while the headline rate is expected to be above that significantly to 6.3%, with the quarterly figure (Q2) falling to 1.9% from 2.1%.
Durable Goods (USD, GMT 12:30) –Durable goods orders are expected to rise 0.8% in June with a 1.0% transportation orders rise. Durable orders ex-transportation is pegged to rise 0.6%, after a 0.7% May increase. Defense orders are expected to fall -1.2%, following a 3.0% May rise. Boeing orders bounced to 50 planes in June from 23, versus a 3-year high of 219 in June of 2021.
FOMC Rate Decision and Monetary Policy Statement (USD, GMT 18:00) – Fed minutes to June meeting leaned to hawkish side, not surprisingly, given inflation worries, strong labor market and signs of pick-up in the economy. This week, the plunge in the Philly Fed manufacturing index and the easing in price pressures, and along with the further gains in jobless claims as the data add to worries over the economy and support the potential for less aggressive action from the FOMC. However, the hot CPI and PPI sparked the potential for an even more aggressive 100 bp boost at the July 26-27 FOMC, on top of the 75 bps in June. That risk was heightened after Fed Governor Waller it was on the table, though he would reserve judgement awaiting more information from retail sales and housing data. Better than expected reports would cause him to lean toward 100 bps. However, a decent but mixed retail sales report did not seem to meet his criteria and the markets repriced for a 75 bp hike.

Thursday – 28 July 2022

Gross Domestic Product (USD, GMT 12:30) – The Q2 GDP growth is anticipated at 1.0% with a moderation in inventory growth and a net export rebound, as both import growth and inventory accumulation give back some of the outsized strength over the Q4-Q1 period. A lean consumption gain in Q2  is expected, with a slowing in real growth into June as soaring prices drained real disposable income, leaving a fairly flat real spending trajectory into Q3. The Q2 report will include annual revisions for the GDP data.

Friday – 29 July 2022

Consumer Price Index (EUR, GMT 09:00) – Annual Inflation in Europe is currently running at 8.6%, while the headline rate for July is expected to be above that significantly to 8.8%
Gross Domestic Product (CAD, GMT 12:30) – The Canadian monthly GDP for May is seen unchanged at 0.3%.
Core PCE Price Index (USD, GMT 12:30) –June personal income could at 0.5% rise after a 0.5% May gain. We expect a 0.6% rise in compensation after a 0.5% gain, given 0.3% June gains for both hours-worked and hourly earnings. A flat figure is anticipated for “current transfer receipts” as the pull-back with the fiscal cliff is now largely behind us.

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Andria Pichidi

Market Analyst

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