Written Commentary
- Canada CPI headlines light day for data and events; digesting slower Japan Services PPI, better Australia Consumer Confidence; US House Prices, Consumer Confidence and Fed surveys ahead: smattering of Fed speakers; FeEx earnings, Germany, Italy, UK & US debt sales
- Canada CPI: petrol prices to push down on headline inflation, housing costs to keep core elevated, very modest y/y falls expected, unlikely to prompt back to back BoC rate cut
- US Consumer Confidence: modest setback expected after May rebound; solid labour demand, lower gasoline prices and mortgage rates should support
EVENTS PREVIEW
Canadian CPI kicks off this week’s run of key inflation data, and headlines an otherwise modest run of statistics, with Japan’s Services PPI to digest ahead of US Consumer Confidence, House Prices and more regional Fed surveys. Fed speakers and the minutes of last week’s Brazilian BCB policy meeting feature in terms of events, which also sees FedEx and Alimentation Couche-Tard quarterly earnings, and govt bond auctions in Germany, Italy, UK and USA.
** Canada – May CPI **
– The consensus looks for a headline rise of 0.3% m/m, which would see the y/y rate edge down to 2.6%, with Median Core CPI expected to be unchanged at 2.6%, and Trimmed Maan down 0.1 ppt at 2.8%. Gasoline prices are likely to be the main drag on headline, while Housing will continue to exercise the most upward pressure on core measures. To a large extent, this would offer backward justification for this month’s rate cut, rather than making the case for a further cut in July, as some forecasters are suggesting. The BoC will be very mindful of not widening the rate gap with the US, and will also want to see further declines towards its 2.0% target on headline and core metrics. Macklem’s comments overnight were non-committal on the pace of further rate moves, though he did place quite a lot of emphasis on the labour market loosening and wage growth slowing as being important considerations.
** U.S.A. – June Consumer Confidence **
– Consumer Confidence is expected to dip to 100.0 after unexpectedly bouncing back to 102.0 from April’s drop, paced by improvements in the Labour differential and Willingness to buy metrics. Lower mortgage rates, a buoyant stock market and lower gasoline prices should support, with the consensus fall doubtless predicated on the sharp drop in Michigan Confidence. CS CoreLogic and FHFA House Prices are both seen up 0.3% m/m, with base effects dictating an expected dip y/y to 7.0%.
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