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“Forthcoming occasions.”
Monday is a holiday in the United States known as Juneteenth.
Tuesday: PBOC LPR.
Wednesday: UK CPI, Fed Chair Powell’s Testimony.
Thursday: SNB Policy Decision, BoE Policy
Decision, US Jobless Claims.
On Friday, there will be a release of the US S&P Global Purchasing Managers’ Indices (PMIs).
Tuesday:
The PBOC is expected to cut the 1-year and 5-year LMP rates by 10 bps following
the cuts in the 7-day reverse repo, the Standing Lending Facility and 1-year
MLF rates. These actions were taken due to the very weak performance of the
Chinese economy that prompted officials to seek more support for growth.
Wednesday:
The UK CPI Y/Y is expected to print at 8.5% vs. 8.7% prior, while the Core CPI
Y/Y is expected at 6.7% vs. 6.8% prior. This report comes just a day before the
BoE rate decision but given that it’s already widely expected that the BoE will
hike by 25 bps, it’s unlikely to see this report changing the expectations for
this meeting unless we see very big surprises.
Fed Chair Powell will testify to Congress
on the state of US monetary policy. Given that it comes just a week after his
FOMC Press Conference and that we haven’t got any top tier economic data in the
meantime, it’s unlikely that we will hear anything different.
Thursday:
The SNB is expected to hike by 25 bps bringing their interest rate to 1.75%.
The step down from 50 bps is justified by the softer CPI data where the
Headline CPI Y/Y came at 2.2% and the Core CPI Y/Y printed at 1.9%. The SNB is
very close to its 0-2% target band but given the recent Governor’s Jordan
hawkish comments after the CPI data about inflation being more persistent than
thought and that both second and third round effects are being seen, the market
expects a 25 bps increase at this meeting that may even be the last one.
The BoE is widely expected to hike by 25
bps bringing the bank rate to 4.75%. The recent inflation and employment data
have been really hot, with wage growth being too high for a return to their 2%
target. Dhingra and Tenreyro are expected to vote for no change, so if any of
them votes for a hike, it would be taken as a hawkish surprise. The market expects
the BoE to take the terminal rate to 5.25% at the moment.
Recently, there has been an increase in US Jobless Claims, falling short of expectations by a significant margin for two consecutive weeks. However, Continuing Claims, which measure the difficulty of finding employment after being unemployed, have remained relatively unchanged. Although there may be some minor weakening in the labor market, it is not yet sufficient to warrant concerns of a recession. Predictions suggest that initial claims will be at 256K, compared to the previous 262K, and continuing claims will be at 1766K, compared to the previous 1775K.
On Friday, the S&P Global US PMIs are expected to be the most significant piece of information for the week. The Manufacturing PMI is expected to be 48.3, a decrease from the previous 48.4, and the Services PMI is forecasted to be 54.0, a decrease from the previous 54.9.
“Hope you have a week that brings you success and profit!”
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