The Week Ahead
Key economic prints from China, and US inflation and retail sales will keep markets busy this week. The G20 gathering (Thu-Fri) will garner interest amid geopolitical and trade tensions, and the earnings season begins with major US banks reporting.
Later today we will hear from the ECB’s Vujcic. China’s GDP, retail sales and industrial production figures hit the screens on Tuesday, and we have the Germany ZEW expectations survey, eurozone industrial production and US inflation and Empire manufacturing print. Central bank chatter includes the Fed’s Collins, Logan and Barkin. UK CPI and US PPI and Industrial production are due on Wednesday. We also have the Fed’s Beige Book, and the Fed’s Williams, Hammack and Barkin speak at separate events. Eurozone CPI, UK employment and US retail sales, initial jobless claims, Phili Fed factory index and business inventories will all be keenly eyed by markets on Thursday. Japan CPI and US housing starts and the Uni. of Michigan sentiment prints close the week.
Trade tensions exacerbated markets again last week amid a new wave of tariffs, letters and mixed messaging flooding newswires. Trump’s scatter gun approach, coupled with the bold announcement of 200% levies on pharmaceuticals and 50% tariffs on copper imports caused ripples through markets. Mixed rhetoric from the Fed did little to settle markets. The yield on the 10 year UST rose 6bps to 4.41%, while the the S&P Index fell 0.31%. The dollar, DXY Index, gained 0.69%, and Brent crude rallied 3.02% to $70.36pb.
Elsewhere, China's exports surged 5.8% in June, and imports rose 1.1%, driven by a reprieve on US tariffs, which should boost Q2 economic growth figures due tomorrow. Despite this, exports to the US fell 16%, highlighting ongoing trade tensions as talks remain stalled and further US tariff hikes loom. Simultaneously, China is launching a new "anti-involution" campaign to promote high-quality development, a joint effort with market participants targeting both traditional and emerging industries with varied approaches. While this gradual initiative hopes to bolster sentiment, deflationary pressures remain a key concern. Despite a slight upside surprise in the CPI at +0.1%yoy, factory-gate prices (PPI) fell by 3.6%yoy, indicating persistent weak demand and a struggling property market. Therefore, sustained fiscal expansion and monetary easing remain crucial to support the nation's economic recovery.
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