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July 26, 2024
Preview: Due August 5 - U.S. July ISM Services - Unlikely to match strong S&P Services PMI
July 26, 2024 6:53 PM UTC
We expect July’s ISM services index to correct higher to 51.0 after slipping to 48.2, its lowest since the pandemic in May 2020. However the index will remain a lot weaker than the S and P services PMI, which in July saw a third straight rise to 56.0, to its highest since March 2022.
Preview: Due August 6 - U.S. June Trade Balance - Deficit to narrow on goods
July 26, 2024 3:40 PM UTC
We expect June’s trade deficit to slip to $73.4bn from $75.1bn, which would be the first narrowing since March. We expect exports to rise by 1.6% after a 0.7% May decline and imports to rise by 0.7% after falling by 0.3% in May.
Argentina: Making Sense of the Three Stages Plan
July 26, 2024 2:51 PM UTC
The Central Bank of Argentina's plan for macroeconomic stabilization includes three stages: an orthodox fiscal exit, establishing an orthodox monetary framework, and prudently lifting FX controls. The fiscal deficit reduction has helped end the monetization of the deficit, while transitioning to a c
FOMC Preview for July 31: Opening the Door for Data-Dependent Easing
July 26, 2024 2:18 PM UTC
Bottom Line: The FOMC meets on July 31 and while a change in rates remains unlikely, the FOMC is likely to signal that easing is possible if data before the next meeting on September 18 provides further evidence of falling inflationary pressure. This will see changes to the wording of the statement,
CBR Hiked Key Rate to 18% as Inflation Soars
July 26, 2024 2:16 PM UTC
Bottom Line: As we predicted, Central Bank of Russia (CBR) announced on July 26 that it increased its policy rate by 200 bps to 18% after four consecutive rate holds, and first time in 2024, to tame the stubborn price pressures stemming from high military spending, tight labour market and fiscal pol
U.S. June Personal Income and Spending - Core PCE Prices acceptably subdued, Income underperforming Spending
July 26, 2024 1:03 PM UTC
June’s personal income and spending report is largely old news, with Q2 totals seen in the GDP detail. In Q2 income surprised on the downside but spending and PCE prices surprised on the upside. For prices and spending the Q2 surprise came more in back month revisions than June data. For income th
July 25, 2024
BoE Preview (Aug 1): Time to Get Less Restrictive
July 25, 2024 3:20 PM UTC
We still think that the BoE will cut Bank Rate by 25 bp at the Aug 1 MPC verdict and that that two further such cuts may arrive by end-year. We accept that stubborn services inflation may harden the hawks, despite softer wage pressures. But while the recent Bernanke Report recommended phasing ou
Mexico: Mixed Signs for Banxico
July 25, 2024 1:52 PM UTC
The Mexican economy shows mixed signals for Banxico. Economic activity indicates a slowdown, with weaker industrial activity and decelerating formal employment. However, inflation is rising, particularly in non-core components like energy and agricultural goods, influenced by climate conditions. The
US Q2 GDP exceeds expectations, business investment the main upside suprise
July 25, 2024 1:06 PM UTC
Q2 GDP has come in significantly stronger than expected with a 2.8% increase while core PCE prices are also above consensus at 2.9%, which suggests despite yesterday’s call from former New York Fed President Dudley, a July Fed easing remains very unlikely.
Eurozone Data Preview (Jul 30): Fading Momentum?
July 25, 2024 9:19 AM UTC
According to revised official national accounts data, the EZ economy actually avoided what was previously suggested to have been a modest recession in H2 last year. Moreover, the economy sparked back in Q1, albeit against a backdrop of marked, if not increasing, national growth divergences but where
July 24, 2024
Preview: Due August 1 - U.S. July ISM Manufacturing - A little firmer but still below neutral
July 24, 2024 6:09 PM UTC
We expect a July ISM manufacturing index of 49.0, slightly improved from 48.5 in June though still short of neutral. March’s 50.3 was the only reading to reach neutral since October 2022.
Preview: Due July 25 - U.S. June Durable Goods Orders - Trend still close to flat
July 24, 2024 5:05 PM UTC
We expect June durable orders to increase by a modest 0.3% overall, ex transport and ex defense, following May data in which overall orders rose by 0.1% but ex transport fell by 0.1% and ex defense fell by 0.2%. This would keep trend close to flat.
Bank of Canada Eases Again Given Increased Confidence in Inflation
July 24, 2024 4:17 PM UTC
The Bank of Canada has delivered a second straight 25bps easing to 4.50% and Governor Tiff Macklem stated there was a clear consensus behind the decision. The BoC’s tone was generally dovish despite looking for stronger GDP growth going forward. We now expect 25bps easings at each of the remaining
U.S. June New Home Sales - Sharp May drop marginally extended
July 24, 2024 2:16 PM UTC
June’s 617k total for new home sales is weaker than expected, and while down only a marginal 0.6% from May extends a sharp 14.9% May decline suggesting that housing demand has lost momentum, as other data has also suggested.
U.S. June Advance Goods Trade Deficit corrects lower as exports bounce
July 24, 2024 12:44 PM UTC
June’s advance goods US trade deficit of $96.8bn from $99.4 is narrower than expected and the first decline in the deficit since December. This and a 0.7% rise in advance retail inventories is supportive for Q2 GDP though the advance rise in wholesale inventories was subdued at 0.2%.
South Africa’s Inflation Slightly Eased to %5.1 YoY in June
July 24, 2024 11:25 AM UTC
Bottom Line: According to the inflation figures announced by Department of Statistics of South Africa (Stats SA) on July 24, CPI marginally decreased to 5.1% YoY in June due to slowdown in costs for food, fuel and transportation coupled with suspended power cuts (load shedding) in June. The inflatio
Short-End Gilts To Discount More Easing?
July 24, 2024 9:15 AM UTC
2yr Gilt yields will likely start declining further after the 1 BOE rate cut (we expect Aug 1), both as BOE communications guide to further cuts in the medium-term and as incoming wage and service inflation provides more comfort to reduce the scale of restrictive policy. We see 2yr Gilt yields at
July 23, 2024
Preview: Due July 31 - Canada May GDP - A modest rise, sustaining momentum in Q2
July 23, 2024 4:45 PM UTC
We expect Canadian GDP to increase by 0.1% in May, modestly extending quite a strong 0.3% increase seen in April and suggesting Q2 GDP will see a respectable rise, probably similar to the 1.7% annualized gain seen in Q1 even if June is subdued.
Preview: Due July 24 - U.S. June New Home Sales - A modest correction after a steep May decline
July 23, 2024 2:30 PM UTC
We expect a modest 1.0% increase in June new home sales to 625k, which would correct a 11.3% decline in May that more than fully reversed two straight preceding gains. This assumes no revision to May’s data though new home sales often see significant revisions.
U.S. June Existing Home Sales - Weakness extending
July 23, 2024 2:15 PM UTC
June existing home sales with a 5.4% decline to 3.89m are weaker than expected but the data is consistent with negative signals from May pending home sales and most other recent signals on housing demand. This is the fourth straight decline with February’s sharp rise now fully erased.
CBRT Continued to Keep Key Rate Stable at 50%
July 23, 2024 1:48 PM UTC
Bottom Line: As predictions were centred around no change, Central Bank of Turkiye (CBRT) kept the policy rate stable at 50% on July 23. CBRT said in a statement that tight monetary stance will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is ob
China: The Squeezed Middle and Bottom 50%
July 23, 2024 8:15 AM UTC
Uncertainty over income and employment, adverse wealth effects from lower house prices, plus growing risk aversion, will likely mean that consumption continues to struggle. This is one of the key reasons why we forecast slower H2 GDP growth and look for 4% in 2025.
The Aussie Chapter 5: Kiwi, a tale of two cities
July 23, 2024 12:00 AM UTC
In "The Aussie", we will look into the "well-known "correlation among the Aussie and well-known benchmark to give our readers a closer look towards factors that have been affecting the movement of the Australian Dollar. In Chapter 4, we will look into the performance of the Aussie relative to the Ki
July 22, 2024
Preview: Due July 31 - U.S. July ADP Employment - Getting more consistent with payrolls
July 22, 2024 3:55 PM UTC
We expect a 130k increase in July’s ADP estimate for private sector employment growth, which is what we also expect for private sector non-farm payrolls. The two series have become more consistent with each other in recent months.
German Data Preview (Jul 30): Inflation Stable Ahead of Fresh Fall in Coming Months?
July 22, 2024 3:10 PM UTC
Base effects have caused the German disinflation process not to be smooth and this was even more clearly the case in recent numbers where after a second successive and slightly larger rise in the headline HICP rate occurred rising 0.4 ppt to 2.8% in May was followed by a drop back to 2.5% in June, 0
UK Household Wealth and the Pension Predicament
July 22, 2024 12:44 PM UTC
Unlike some other parts of the DM world, UK households have seen a serious dent put into their stock of wealth in the last two years. Indeed, household net worth fell in both 2022 and 2023, both in absolute terms and also as a % GDP (Figure 1). The 2022 drop was very much a slump in pension fund
China: Surprise 7 Day Reverse Repo Rate Cut
July 22, 2024 8:41 AM UTC
China 10bps cut in the 7 day reverse repo rate and 1 and 5yr Loan Prime Rate (LPR) was sooner than expected, as a move had not been anticipated until the Fed cuts rates. However, this is not the start of a new aggressive policy phase, but rather a tactical move given the targeted nature of easing.
July 19, 2024
Bank of Canada Preview for July 24: A Pause Between Easings
July 19, 2024 4:30 PM UTC
The Bank of Canada meets on July 24 and the decision will be close call between a second straight 25bps easing to follow the move seen on June 5 or leaving rates unchanged at 4.75%. We lean towards the latter option due to caution over inflation, though forecasts in the accompanying Monetary Policy
Canada May Retail Sales - Cleary weak
July 19, 2024 12:50 PM UTC
Canada’s May retail sales data is unambiguously weak, with a 0.8% decline overall compared to an advance estimate of -0.6%, a 1.3% fall ex autos, a 1.4% fall ex autos and gasoline, and a 0.7% decline in real terms. The advance estimate for June is also negative at -0.3%.
July 18, 2024
ECB Review: Policy Window Stays Very Open
July 18, 2024 1:56 PM UTC
Maybe the ECB is now thinking that it was too clear at its April Council meeting that rate cut would occur subsequently in June, basically then suggesting that something would have to occur to prevent such a move. This time, with policy rates held as very much expected, the policy window was merel
Trump 2.0: Markets Guessing Policy Priorities
July 18, 2024 9:10 AM UTC
If Trump is elected president we still feel that the top priorities for implementation will likely be reducing immigration and making permanent tax cuts that are due to lapse in 2025. Trump would likely jawbone on all issues, but actual policy changes are more important for persistent moves in mar