Weekly Market Outlook (08-12 July)

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UPCOMING
EVENTS:

• 
  Monday:
  Japan
  Wage
  data.
• 
  Tuesday:
  US
  NFIB
  Small
  Business
  Optimism
  Index,
  Fed
  Chair
  Powell
  Testimony.
• 
  Wednesday:
  Japan
  PPI,
  China
  CPI,
  RBNZ
  Policy
  Decision,
  Fed
  Chair
  Powell
  Testimony.
• 
  Thursday:
  UK
  GDP,
  US
  CPI,
  US
  Jobless
  Claims.
• 
  Friday:
  New
  Zealand
  Manufacturing
  PMI,
  US
  PPI,
  US
  University
  of
  Michigan
  Consumer
  Sentiment.

Tuesday

Fed
Chair
Powell
will
testify
to
the
Senate
Banking
Committee
on
Tuesday
and
the
House
Financial
Services
Committee
on
Wednesday.
The
market
participants
will
be
attentive
to
any
view
or
hint
about
the
monetary
policy
trajectory
after
the
recent

NFP
report.

The
text
is
generally
released
before
the
testimony
so
that
will
be
scanned
for
clues
or
“bias”,
but
the
market
will
also
be
focused
on
the
Q&A
session
following
the
opening
remarks.
Given
the
recent
data,
Powell
will
likely
lean
on
the
dovish
side.

Wednesday

The
RBNZ
is
expected
to
keep
interest
rates
unchanged
at
5.5%.
As
a
reminder,
the
central
bank
delivered
a
hawkish
hold
at
the

last
meeting
as
they
raised
the
Official
Cash
Rate
forecasts
and
pushed
back
the
first
rate
cut
to
late
2025.
The
market
continues
to
expect
41
bps
of
easing
by
the
end
of
the
year.

Thursday

The
US
CPI
Y/Y
is
expected
at
3.1%
vs.
3.3%
prior,
while
the
M/M
measure
is
seen
at
0.1%
vs.
0.0%
prior.
The
Core
CPI
Y/Y
is
expected
at
3.4%
vs.
3.4%
prior,
while
the
M/M
figure
is
seen
at
0.2%
vs.
0.2%
prior.

This
is
going
to
be
an
important
release.
I
think
the
Fed
will
be
more
dovish
at
the
next
meeting
if
we
get
a
good
report.
Then,
if
we
get
some
more
benign
figures
in
August,
Fed
Chair
Powell
will
likely
pre-commit
to
a
rate
cut
in
September
at
the
Jackson
Hole
Symposium.

The
US
Jobless
Claims
continue
to
be
one
of
the
most
important
releases
to
follow
every
week
as
it’s
a
timelier
indicator
on
the
state
of
the
labour
market.

Initial
Claims
remain
pretty
much
stable
around
cycle
lows
and
inside
the
200K-260K
range
created
since
2022.
Continuing
Claims,
on
the
other
hand,
have
been
on
a
sustained
rise
recently
with
the
data
printing
new
cycle
highs
every
week.

This
shows
that
layoffs
are
not
accelerating
and
remain
at
low
levels
while
hiring
is
more
subdued.
This
is
something
to
keep
an
eye
on.
This
week
Initial
Claims
are
expected
at
240K
vs.
238K

prior,
while
Continuing
Claims
are
seen
at
1860K
vs.
1858K
prior.

Friday

The
US
PPI
Y/Y
is
expected
at
2.3%
vs.
2.2%
prior,
while
the
M/M
measure
is
seen
at
0.1%
vs.
-0.2%
prior.
The
Core
PPI
Y/Y
is
expected
at
2.5%
vs.
2.3%
prior,
while
the
M/M
figures
is
seen
at
0.2%
vs.
0.0%
prior.
I
don’t
expect
this
data
to
influence
the
market
much
given
that
the
sentiment
will
be
set
by
the
CPI
report
the
day
before.