Written Commentary
- Focus on Sintra central bankers policy panel discussion on light day for data & events; digesting Australia CPI fall, China Industrial Profits; US Goods Trade Balance and Inventories ahead; Fed bank stress tests; UK and US bond auctions
- Italy CPI: electricity price fall to pace sharp headline decline; core CPI also set to fall in contrast to Eurozone
- Australia headline CPI slide marred by still sticky core inflation
- ECB Sintra policy panel: Powell, Lagarde & Bailey unlikely to stray from comments, focus on ‘doing too much’ vs. rates restraint debate
- CGTN interview about Premier Li speech on China economic outlook: watch here
EVENTS PREVIEW
The policy panel discussion with Powell, Lagarde & Bailey at the ECB Sintra Forum is likely to be the highlight of an otherwise quite light day for data and events. The statistical schedule sees Italy kicking off this week’s run of Eurozone inflation data, as sharper than expected fall in headline Australian CPI, though core measures eased only marginally, is digested, and with only the US Advance Goods Trade Balance and Wholesale & Retail Inventories scheduled for release. The Fed publishes the results of this year’s annual bank stress tests, with General Mills and Micron Technology the highlights of today’s corporate earnings. There are govt bond auctions in the UK (15-yr), and the US (7-yr & 2-yr FRN). In terms of the policy panel discussion, markets will doubtless hone in on the relative ‘hawkishness’ of the three central bankers, but they are unlikely to stray from recent comments, nevertheless it will be interesting to note how they judge the merits and risks of ‘doing too much’ in their respective inflation fight, against attempting to engineer a ‘soft landing’. In that respect, the contrast between yesterday’s robust US Durable Goods Orders, New Home Sales, House Prices and Consumer Confidence and the run of lacklustre or poor Eurozone and UK data continues to be very striking.
** Italy – June HICP **
Unusually Italy will be ‘first out of the door’ in terms of national HICP readings, with pan-Eurozone readings due on Friday. Headline HICP is forecast to rise 0.1% m/m which would take the y/y rate down sharply to 6.8% from 8.0% in May, paced by Household utility prices, above all electricity, after the local regulator cut electricity prices by 55.3% for Q2, with less than a quarter of that cut having registered in April and May HICP. In contrast to the Eurozone as a whole, core CPI is also likely to fall thanks to base effects for restaurants & hotels, which saw a hefty rise in June 2022 as tourism re-opened, which are unlikely to have been repeated this year.
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