The Week Ahead: Highlights

Asia-Pacific Preview

Up Next: RBNZ Rate Decision, Chinese Inflation Reports

By Brian Jackson, Econoday Economist

The Reserve Bank of New Zealands policy meeting will be the main focus in the Asia-Pacific region in the week ahead, with officials likely to provide an updated assessment of the impact of the Iran conflict on the scope for adjusting policy settings. At their previous meeting late May, three members of the Monetary Policy Committee voted to raise policy rates but were outvoted by the other four, with concerns about the Iran conflict cited as a reason for caution. Officials agreed, however, that tighter policy at upcoming meetings would likely be necessary "to ensure higher near-term inflation does not feed through to higher medium-term inflation". With supply disruptions caused by that conflict easing since then, a rate hike next week seems likely.

Chinese inflation data for June will also be published in the week ahead. Consumer price inflation has been steady in recent months, with weaker food prices offsetting the impact the Iran conflict on fuel prices. Producer price inflation, however, has risen to its highest level since mid-2022 after an extended period of deflation, and next weeks data will be watched for any further evidence that cost pressures are building. June PMI survey data this week showed an easing in input price inflation in both the manufacturing and services sectors.

Taiwan will also report inflation data as well as trade data. The trade data will likely show that export growth remains supported by very strong demand for artificial intelligence technology and other high-tech Taiwanese products.

US Preview

Markets Eye FOMC Minutes for Preview to Upcoming Family Fight

By Theresa Sheehan, Econoday Economist

There is relatively little data on the economic calendar during the week of July 6 and most of it does not have the potential to move markets. Instead, the focus will be on the minutes of the June 16-17 FOMC minutes set for release at 14:00 ET on Wednesday.

The minutes will provide the first look at FOMC deliberations under the leadership of Chair Kevin Warsh. At his June 17 press briefing, Warsh laid out plans for reforms at the Fed which included how the FOMC will communicate its monetary policy outlook. The first big step is the elimination of forward guidance.

At an ECB forum on July 1, Warsh heartily endorsed CDB President Christine Lagardes use of the term framework guidance as the successor to forward guidance. Warsh indicated that an independent Federal Reserve will deliver price stability by using the full range of data available which could encompass using private sources of data as more current than some of the government reports.

Warsh has spoken about FOMC discussions as a family fight, perhaps to convey that policymakers are united in their purpose but able to have frank differences to get things right. The June 16-17 minutes could well be a departure in tone from the dry recounting that has long characterized the minutes.

What the minutes are unlikely to do is signal the future path of monetary policy. It may be illuminating as to the split among FOMC participants about inflation concerns and the health of the labor market.

The minutes will reflect conditions three weeks ago and could feel a little stale after the June employment report and the recent fall in oil prices.

The Week Ahead: Econoday Consensus Forecasts

Monday

Germany Manufacturing Orders for May (Mon 0800 CEST; Mon 0600 GMT; Mon 0200 EDT)

Consensus Forecast, M/M: 0.8%

Consensus Range, M/M: -1.0% to 4.0%

Consensus Forecast, Y/Y: 4.2%

Consensus Range, Y/Y: 2.7% to 7.9%

Forecasters expect orders up 0.8 percent on the month and 4.2 percent on year in May, a big recovery from a drop of 3.8 percent on month and an increase of 1.5 percent on year in April.

Eurozone Retail Sales for May (Mon 1100 CEST; Mon 0900 GMT; Mon 0500 EDT)

Consensus Forecast, M/M: 0.3%

Consensus Range, M/M: -0.6% to 0.3%

Consensus Forecast, Y/Y: 1.6%

Consensus Range, Y/Y: 0.8% to 1.6%

Sales expected to increase by 0.3 percent on the month and 1.6 percent on year in May after declining 0.4 percent on the month and rising 1.0 percent on year in April.

Eurozone PPI for May (Mon 1100 CEST; Mon 0900 GMT; Mon 0500 EDT)

Consensus Forecast, M/M: 0.2%

Consensus Range, M/M: 0.2% to 0.7%

Consensus Forecast, Y/Y: 5.5%

Consensus Range, Y/Y: 4.7% to 5.8%

PPI seen up 0.2 percent on month and 5.5 percent on year in May after rising 0.6 percent and 4.9 percent in April.

US PMI Composite Final for June (Mon 0945 EDT; Mon 1345 GMT)

Consensus Forecast, Composite Index: 52.2

Consensus Range, Composite Index: 52.2 to 52.2

Consensus Forecast, Services Index: 51.3

Consensus Range, Services Index: 51.3 to 51.9

No revision is expected in the June final from the flash with the composite at 52.2 and services at 51.3. That is up a bit from 51.5 for composite and 50.7 for services in the May final.

US ISM Services Index for June (Mon 1000 EDT; Mon 1400 GMT)

Consensus Forecast, Index: 54.1

Consensus Range, Index: 52.0 to 55.0

The consensus sees the services index down marginally at 54.1 for June from 54.5 in May. That would suggest growth in the mighty services sector continues at a moderate clip.

Tuesday

Japan Household Spending for May (Tue 0830 JST; Mon 2330 GMT; Mon 1930 EDT)

Consensus Forecast, M/M: 1.9%

Consensus Range, M/M: 1.2% to 2.5%

Consensus Forecast, Y/Y: -2.3%

Consensus Range, Y/Y: -2.6% to 0.3%

Germany Industrial Production for May (Tue 0800 CEST; Tue 0600 GMT; Tue 0200 EDT)

Consensus Forecast, M/M: 0.1%

Consensus Range, M/M: -1.0% to 1.0%

Consensus Forecast, Y/Y: -0.3%

Consensus Range, Y/Y: -0.6% to 0.8%

Output expected up 0.1 percent on the month and down 0.3 percent on year in May.

Canada Merchandise Trade for May (Tue 0830 EDT; Tue 1230 GMT)

Consensus Forecast, Balance: C$2.5 B

Consensus Range, Balance: C$2.5 B to C$3.7 B

Exports lifted by rising energy prices. On the import side, the arrival of Chinese EVs expected to boost imports. Leaves the surplus at C$2.5 billion in May versus C$2.7 billion in April.

US International Trade in Goods and Services for May (Tue 0830 EDT; Tue 1230 GMT)

Consensus Forecast, Balance: -$78.7 B

Consensus Range, Balance: -$85.2 B to -$75.5 B

Based on wider goods trade deficit already reported, the goods & services deficit is seen at $78.7 billion in May from $55.9 billion in April.

Wednesday

New Zealand RBNZ Announcement (Wed 1400 NZDT; Wed 0100 GMT; Tue 2200 EDT)

Consensus Forecast, Change: 25 bp

Consensus Range, Change: 0 bp to 25 bp

Consensus Forecast, Level: 2.50%

Consensus Range, Level: 2.25% to 2.50%

Most forecasters look for a 25 bp rate increase in the official cash rate to tamp down inflation but a vocal minority sees no change and data dependent guidance.

US Consumer Credit for May (Wed 1000 EDT; Wed 1400 GMT)

Consensus Forecast, M/M: $17.5 B

Consensus Range, M/M: $11.0 B to $19.0 B

The consensus looks for another robust $17.5 billion May increase in consumer credit outstanding after a big $20.7 billion jump in April.

Thursday

China CPI for June (Thu 0930 CST; Thu 0130 GMT; Wed 2130 EDT)

Consensus Forecast, Y/Y: 1.2%

Consensus Range, Y/Y: 1.1% to 1.4%

The consensus looks for annual inflation flat at 1.2% percent in June versus 1.2 percent in May.

China PPI for June (Thu 0930 CST; Thu 0130 GMT; Wed 2130 EDT)

Consensus Forecast, Y/Y: 4.1%

Consensus Range, Y/Y: 3.5% to 4.2%

Forecasters expect wholesale prices to rise by 4.2 percent in June, up from 3.9 percent in May.

Germany Merchandise Trade for May (Thu 0800 CEST; Thu 0600 GMT; Thu 0200 EDT)

Consensus Forecast, Balance: E 16.0 B

Consensus Range, Balance: E16.0 B to E16.0 B

The surplus is expected to expand to E16.0 billion in May from E14.5 billion in April.

US Jobless Claims for Week of July 04 (Thu 0830 EDT; Thu 1230 GMT)

Consensus Forecast, Initial Claims - Level: 219 K

Consensus Range, Initial Claims - Level: 215 K to 225 K

Claims expected up 4K at 219K in the latest week as they remain stuck around that level, suggesting a stable job market with not many people losing jobs but not many getting new jobs either.

US Existing Home Sales for June (Thu 1000 EDT; Thu 1400 GMT)

Consensus Forecast, Annual Rate: 4.20 M

Consensus Range, Annual Rate: 4.07 M to 4.24 M

Affordability trouble is keeping sales stable at relatively low levels. Forecasters see sales nearly flat at 4.20 million in June versus 4.17 million in May.

Friday

Japan PPI for June (Fri 0750 JST; Thu 2350 GMT; Thu 1950 EDT)

Consensus Forecast, M/M: 0.2%

Consensus Range, M/M: 0.0% to 0.7%

Consensus Forecast, Y/Y: 6.6%

Consensus Range, Y/Y: 6.4% to 7.2%

Germany CPI for June (Fri 0800 CEST; Fri 0600 GMT; Fri 0200 EDT)

Consensus Forecast, M/M: -0.3%

Consensus Range, M/M: -0.3% to -0.2%

Consensus Forecast, Y/Y: 2.4%

Consensus Range, Y/Y: 2.3% to 2.6%

Consensus Forecast, HICP - M/M: -0.2%

Consensus Range, HICP - M/M: -0.2% to -0.2%

Consensus Forecast, HICP - Y/Y: 2.4%

Consensus Range, HICP - Y/Y: 2.4% to 2.4%

The final CPI report for June is expected unrevised at minus 0.3 percent on the month. The year on year increase is expected to show a 2.4 percent increase versus 23 percent previously reported.

France CPI for June (Fri 0845 CEST; Fri 0645 GMT; Fri 0245 EDT)

Consensus Forecast, M/M: -0.2%

Consensus Range, M/M: -0.3% to 0.1%

Consensus Forecast, Y/Y: 1.8%

Consensus Range, Y/Y: 1.8% to 2.0%

The consensus sees no revision in the final June CPI at minus 0.2 percent on month and up 1.8 percent on year.

Italy Industrial Production for May (Fri 1000 CEST; Fri 0800 GMT; Fri 0400 EDT)

Consensus Forecast, M/M: -0.2%

Consensus Range, M/M: -0.2% to 0.2%

Consensus Forecast, Y/Y: 1.3%

Consensus Range, Y/Y: 1.3% to 1.5%

Output is expected down 0.2 percent on the month and up 1.3 percent on year in May.

Canada Labour Force Survey for June (Fri 0830 EDT; Fri 1230 GMT)

Consensus Forecast, Employment - M/M: 10K

Consensus Range, Employment - M/M: 10K to 25K

Consensus Forecast, Unemployment Rate: 6.6%

Consensus Range, Unemployment Rate: 6.5% to 7.0%

The jobless rate is expected flat at 6.6 percent in June. Employment is seen up a modesy 10K after an outsized 88K increase in May.