Become a logicalchat Member

Latest Post

Your story starts here. Sign up and let's connect in ways that truly matter!

HomeLatest NewsGlobal NewsThe Week Ahead: Earnings, China data dump, Canadian CPI- July 17-21

The Week Ahead: Earnings, China data dump, Canadian CPI- July 17-21

The Week Ahead

The week Ahead highlights.: The banks earnings, June retail sale, Housing data well as the Earnings will Start

Weekly recap 

Disinflation headlined the week. US CPI and PPI coming in significantly below projections, fueling excitement that the Fed may only need to increase once more, relieving pressure from other central banks (BOE aside) to keep hiking.

Bond yields fell, sending the dollar index to a 15-month low below 100, USD/CHF to an 8-year low, and gold to a 4-week high.

The Nasdaq 100 and S&P 500 likewise reached 18-month and 15-month highs on Wall Street.

Money markets expect another 25bp hawkish boost from the BOC (Bank of Canada) in September for their final hike.

After twelve consecutive raises, the RBNZ paused their tightening cycle, indicating that 5.5% will be the high and rates will stay there for some time.

From 2024, the RBA will hold eight monetary policy meetings, each with a press conference, and release their quarterly Statement on Monetary Policy at each meeting.

Strong UK wages data propelled GBP/USD to a 15-month high and the 1.30 handle as traders bet on another 50bp BOE boost and a terminal rate above 6%.

Japan and Switzerland had the strongest currencies.

After seven years as RBA Governor, Lowe will be succeeded by Deputy Governor Michelle Bullock in September.

Exports fell -12.4% y/y and imports fell -7.5% y/y in China.

KEY TAKEAWAYS

Earnings season is set to enter a busy week with reports from Bank of America, Morgan Stanley, Lockheed Martin, Tesla, Netflix, IBM, Goldman Sachs, Johnson & Johnson, and United Airlines, among others.

On Tuesday, the U.S. Census Bureau will issue data on retail sales for the month of June, offering a valuable update on consumer spending.

We’ll also get the latest reports on the housing market, including building permits, housing starts, and existing home sales for June, as well as the NAHB’s Housing Market Index.

DAY WISE GLOBAL EVENTS

Monday

 PBoC deputy governor Liu Guoqiang said last Friday that they expect inflation to have a U-shaped recovery in the second half of the year, therefore they won’t decrease the MLF rate. The central bank loans to large commercial banks at the MLF rate. The LPR follows the MLF.

Tuesday 

US Retail Sales are predicted to rise 0.5% vs. 0.3%, and Core Retail Sales 0.3% vs 0.1%. The Control Group should rise 0.2% compared to 0.2% previously. Last week’s large miss in US Core CPI and Friday’s significant surge in Consumer Sentiment boosted the soft-landing narrative. Retail Sales should miss by a lot to frighten markets.

Canada CPI Y/Y is forecast at 2.9% vs. 3.4% and M/M at 0.3% vs. 0.4%. The Core CPI and the BoC’s preferred measures—CPI-common, CPI-trimmed, and CPI-median—are the data points to watch for policy decisions.

Wednesday

 New Zealand CPI (Q2) Y/Y is projected at 5.9% vs. 6.7%, and Q/Q at 0.9% vs. 1.2%. The RBNZ kept its official cash rate at 5.5% last week as predicted to “remain at the restrictive level for the foreseeable future to ensure that consumer price inflation returns to the 1-3% annual target range”.

The UK CPI Y/Y is projected at 8.2% vs. 8.7% and the M/M at 0.4% vs. 0.7%. Core CPI Y/Y is forecast at 6.8%, down from 7.1%, and M/M at 0.4%, down from 0.8%. The BoE raised rates by 50 bps last time after positive employment and inflation figures. If the employment report misses, the BoE should raise rates by 25 bps. This time, earnings surprised but jobs missed. If data heats up again, they should increase by 50 bps.

Thursday 

The PBoC will only change LPR rates if it surprises with an MLF rate move on Monday.

The Australian Jobs report surprised positively last time. The Unemployment Rate is expected to stay at 3.6%, the Participation Rate at 66.9%, and Employment Change to rise 17.0K from 75.9K. To return inflation to target, the RBA wants a labor market weakening.

US Initial Claims are estimated at 243K versus 237K and Continuing Claims at 1725K versus 1729K. Jobless Claims continue near record lows, indicating a healthy US labor market.

Friday

The Japan CPI Y/Y is estimated at 3.5%, up from 3.2%, and the Core Y/Y at 3.3%. The CPI ex-Food & Energy Y/Y is predicted to rise to 4.2% from 4.3%, a 40-year high. The BoJ won’t adjust its dovish monetary policy at the upcoming meeting. As the BoJ raises its FY2023 inflation projection to 2%, a former BoJ director expects the central bank to widen the YCC band from -/+ 0.50% to -/+ 1.00% at the July meeting.

Key factors for the wall street week Ahead 

A Busy Week of Earnings

On Tuesday, investors will be monitoring Bank of America’s earnings for clues as to how the Fed’s rate hikes have impacted profitability at big banks. Bank of America’s interest margins were likely boosted by higher interest rates. Net interest income at America’s second-largest bank is projected at $14.29 billion, up 14% from the same quarter last year, according to research from Zacks.1

June Retail Sales

On Tuesday, the U.S. Census Bureau will release June retail sales figures, providing a timely update on consumer spending. Retail sales, which are not adjusted for inflation, likely rose 0.5% last month, extending May’s 0.3% gain. Year-over-year, they were likely up just 1.1%, which would mark the smallest annual increase since a decline early in the pandemic. Consumer spending, which accounts for more than two-thirds of U.S. gross domestic product (GDP), has been robust over the past two years despite high inflation and lingering recession fears.

Housing Market Updates

We’ll get the latest updates on the housing market next week, including June building permits, housing starts, and existing home sales, and the NAHB’s Housing Market Index for July. Housing starts, a proxy for home construction, likely fell drastically to 1.45 million units in June, after unexpectedly surging to 1.63 million units in May, which marked the highest figure in over a year. Building permits were probably little changed last month, holding steady near 1.49 million units.

On Thursday, the National Association of Realtors (NAR) will release last month’s existing home sales figures. They’re projected to have fallen slightly to 4.23 million units from 4.3 million in May. Sales tumbled last year as rising mortgage rates impacted housing demand, bottoming out at four million units in December, which marked the lowest figure since 2010. Sales have rebounded since, but could resume their downward slide if mortgage rates continue to rise, driven by the Federal Reserve’s interest rate hikes.

UK inflation

Wednesday’s U.K. inflation statistics will likely determine the Bank of England’s next rate hike.
Food and gasoline costs are forecast to fall, lowering the headline CPI to 8.2% from 8.7% in May. Core inflation is predicted to fall, but the services component is expected to stay at 7.4%, a post-COVID high.
If inflationary pressures remain, notably in services CPI, the BoE stated it would tighten again in its June meeting minutes.
This might make August’s meeting a tough call: an advance in services CPI would likely lock in bets for another 50-basis point hike, while a weaker figure would likely support a 25-bps hike.

China’s data leak, loan prime rates

On Monday, China will report Q2 GDP, industrial production, retail sales, investment, and unemployment. Q1 GDP beat estimates, but given the worse statistics, Q2 GDP may not. Manufacturing PMIs are falling, services PMIs are barely rising, imports and exports are falling, and inflation is falling. This hurts global growth. Beijing’s demand-driven economy is undermined by inaccurate retail sales figures. Still, worse numbers mean more stimulus. If extreme enough, markets can bounce on news of the plunging protection team to support local share markets, and the yuan could be permitted to sink further to stimulate exports. Watch the LPRs (loan prime rate) to see whether they are decreased again to stimulate aggregate demand.

Canada’s monthly inflation report, retail sales

The RBA and BOC hiked twice in a row after markets had grown accustomed to central banks pausing. In September, odds are on another 25bp after Canada’s hot employment data. However, if next week’s inflation or retail sales statistics show weakness, the BOC may not raise rates in September if the Fed is not as hawkish as some think. The BOC prefers less volatile median and reduced CPI measures, but bears may still short these. Soft headline CAD numbers. A strong retail sales data could push minds toward another raise after the BOC noted the pickup in demand. Either

RBA minutes

At their last meeting, the RBA gave a “dovish hike,” but with a tight labor market and “too high” inflation, another hike is likely. However, slower US CPI growth reduces RBA impetus to increase in August. Governor Lowe has two meetings remaining before Michelle Bullock takes over, so he may want to do his task before handing over the keys. The minutes may be old, but they will show how close the RBA felt they were to ending the tightening cycle.

USA Economic calendar for week

Monday, July 17

New York Empire State Manufacturing Index (Jul)

Tuesday, July 18

U.S. Retail Sales (Jun)

Industrial Production (Jun)

Business Inventories (May)

Retail Inventories (May)

NAHB Housing Market Index (Jul)

Wednesday, July 19

Housing Starts (Jun)

Building Permits (Jun)

U.K. Inflation Rate (Jun)

Euro Area Inflation Rate (Jun)

Thursday, July 20

Philadelphia Fed Manufacturing Index (Jul)

Conference Board Leading Index (Jun)

Existing Home Sales (Jun)

Japan Inflation Rate (Jun)

GLOBAL ECONOMIC CALENDAR FOR WEEK JULY 17-21

MONDAY

CHINA

Q2CY23 GDP Growth & industrial capacity Utilisation; Industrial Production, Unemployment rate 

TUESDAY

USA

Retail Sales, Industrial Production(Jun); Business Inventories (May)

WEDNESDAY

USA

API & EIA Crude Oil Stock Change, MBA Mortgage Applictions (for week ended Jul 14); housing Starts (Jun)

EURO AREA

Inflation (June), construction output (May)

THURDAY

USA

Initial Jobless claims ((for week ended July 15), Existing Home Sales (Jun)

EURO AREA

Current Account (May)

JAPAN

Balance of trade (june)

FRIDAY

JAPAN

Inflation (june)

EARNINGS CALENDAR

MONDAY JULY 17

Equity Lifestyle Properties Inc. (ELS)

TUESDAY JULY 18

Bank of America (BAC), Morgan Stanley (MS), Novartis (NVS), Lockheed Martin (LMT), Prologis Inc. (PLD), The Charles Schwab Corporation (SCHW), PNC Financial Services (PNC), Bank of New York Mellon (BK), J.B. Hunt Transport Services (JBHT), Omnicom Group Inc. (OMC), Synchrony Financial (SYF), and Hasbro Inc. (HAS)

WEDNESDAY JULY 19

Tesla (TSLA), Netflix (NFLX), IBM (IBM), Goldman Sachs (GS), Elevance Health (ELV), U.S. Bancorp (USB), Crown Castle Inc. (CCI), Las Vegas Sands (LVS), Biogen Inc. (BIIB), Kinder Morgan (KMI), Baker Hughes Co. (BKR), Halliburton (HAL), Discover Financial Services (DFS), Equifax Inc. (EFX), Nasdaq Inc. (NDAQ), and United Airlines (UAL)

THURSDAY JULY 20

Taiwan Semiconductor Manufacturing Company (TSM), Johnson & Johnson (JNJ), Abbott Laboratories (ABT), SAP (SAP), Philip Morris International (PM), Intuitive Surgical Inc. (ISRG), Marsh & McLennan Cos. (MMC), CSX Corporation (CSX), Blackstone Inc. (BX), Freeport McMoran (FCX), Kenvue (KVUE), Truist Financial Corp. (TFC), Capital One Financial (COF), D.R. Horton (DHI), and The Travelers Companies (TRV), and Newmont Corp. (NEM)

Friday, July 21

American Express Co. (AXP), HDFC Bank Ltd. (HDB), The Progressive Corporation (PGR), Schlumberger (SLB), Roper Technologies Inc. (ROP), Regions Financial Corp. (RF), and Huntington Bancshares Inc. (HBAN)

For details

The Week Ahead The Week Ahead The Week Ahead The Week Ahead The Week Ahead The Week Ahead The Week Ahead The Week Ahead The Week Ahead The Week Ahead The Week Ahead

 

Related Post