Focus on the RBNZ, the BoC and the start of the earnings season
On Monday 10th: Chinese inflation is due.
On Tuesday 11th: The Australian Westpac-Melbourne Institute Consumer Sentiment Index and NAB business confidence index are both due, along with Germany’s ZEW Economic Sentiment Index.
On Wednesday 12th: The RBNZ meets on monetary policy, RBA Governor Lowe speaks in Brisbane, the US publishes inflation figures, and the BoC meets on monetary policy.
On Thursday 13th: The Chinese Balance of Trade, UK GDP figures and US PPI are published.
On Friday 14th: The EU Trade Balance and US Michigan Consumer Sentiment Index are both due.
Weekly outlook
This week marks the start of earnings season, with major players in the financial industry leading the charge. The recent failures of some regional banks in the US provided an opportunity for large banks to acquire their smaller rivals at a discount last quarter. Many of them, notably JPMorgan Chase, Citigroup, and Wells Fargo, who will report this week, have seen their profits soar as a result of increased deposits and favorable interest rates.
Also worth keeping an eye on this week are the monetary policy meetings in New Zealand and Canada, as further increases are anticipated. Despite the fact that inflation is decreasing progressively, many economists anticipate that these central banks will raise interest rates once more to bring inflation back to its target level.
Monday 10th of July
China reports its annualized and monthly inflation rate at 1:30 AM GMT today. Despite falling short of market expectations, the annual inflation rate increased somewhat from April's 26-month low of 0.1% to 0.2% in May. Expectations are for a further rise to 0.5% for June year on year, while being down 0.1% from the month prior.
Tuesday 11th of July
The Westpac-Melbourne Institute Consumer Sentiment index in Australia, which is due at 12:30 AM GMT today, surprisingly increased by 0.2% month over month in June, stabilizing close to recession lows at 79.2 after the RBA chose to raise rates again. The forecast for July is for a slight improvement to 80.4.
Meanwhile, Australia’s NAB business confidence index was -4 last month, compared to market expectations and April's 0. This was the third negative reading this year due to reductions across industries, save mining, manufacturing, transport and utilities, which witnessed minor growth. When the latest report is due at 1:30 AM GMT, analysts expect a further dip to -6.
Germany's ZEW Indicator of Economic Sentiment Index is due to be published at 9:00 AM GMT today. The Index for June rose to -8.5 from -10.7. However, since the indicator remained decisively in negative territory, it seems that financial markets do not expect an economic rebound in the second half of the year, and the expected result of -13 for July would also suggest the same.
Wednesday 12th of July
The Reserve Bank of New Zealand is due to meet on monetary policy this week, with its statement due at 2:00 AM GMT. At its May meeting, the RBNZ raised the official cash rate by 25 basis points to 5.5%, the highest since December 2008. With inflation at 6.7% in the first quarter, and inflation expectations still remaining high, analysts believe this may prompt a 13th straight rate hike to 5.75% this month.
Reserve Bank of Australia Governor, Philip Lowe, is scheduled to speak at Brisbane's ESA National Conference today from 3:10 AM GMT. The RBA kept its cash rate at 4.1% in July, with the board suggesting it needed more time to evaluate prior hikes and that inflation has peaked, with the monthly CPI index dropping 5.6% in May. Investors will be looking for insight into the near future of rates from the presentation.
Inflation figures from the US will be published at 12:30 PM GMT today. The CPI fell to 4.0% in May, the lowest rate since March 2021, which was largely attributable to falling energy prices. A further drop to 3.6% is forecast this month. The core rate, which excludes volatile goods like food and energy, also fell to 5.3% last month, the lowest since November 2021. A drop to 5% is expected for June.
The Bank of Canada will meet to decide the direction of monetary policy today, with the decision statement made available at 2:00 PM GMT. Despite market expectations that interest rates would remain unchanged in June, the BoC unexpectedly increased its overnight rate by 25 basis points to 4.75%. Some economists expect that policymakers believe monetary policy is still not tight enough to restore equilibrium between supply and demand to return inflation to the 2% target, and forecast a further 25 basis points bump this month.
Major Earnings Report:
DNB Bank
Thursday 13th of July
China's trade surplus fell to USD 65.81 billion in May from USD 78.40 billion a year earlier and below market expectations. Increasing poor global demand had exports decreasing more than imports, resulting in the narrowest trade surplus since February. However, expectations are for a bump to USD 68 billion when the latest report is released at 3:00 AM GMT.
The newest UK GDP figures are published at 6:00 AM GMT today. After contracting by 0.3% in March due to the effects of heavy rain and strikes on consumer spending, the British economy grew by 0.2% in April, but forecasts are for no growth for May month over month.
After rising 0.2% in April, US producer prices for final demand fell 0.3% in May. Gasoline prices fell 13.8% and food prices fell 1.3%, lowering goods prices 1.6%, the greatest reduction since July 2022. Consensus expectations for June are for a 0.2% increase when the report is released at 12:30 PM GMT.
Major Earnings Reports:
PepsiCo
Aker BP
Progressive Corp
Friday 14th of July
The EU Trade Balance for May is due at 9:00 AM GMT today. The deficit in the EU in April was EUR 11.7 billion, down from EUR 34.5 billion the previous year at the same time. Some analysts expect this may grow to around EUR 16.4 billion.
U.S. consumer sentiment as measured by the University of Michigan rose to a four-month high of 64.4 in June. Positive sentiments towards easing inflation and the conclusion of the debt ceiling crisis earlier in the month are thought to be behind the uptick. When the newest report is released at 2:00 PM GMT, expectations are for a slight improvement to 64.8.
Major Earnings Reports:
United Health
JP Morgan Chase & Co
Wells Fargo & Co
BlackRock Inc.
Citigroup
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