06 July 2026
The week begins with a busy Monday featuring eurozone retail sales and producer price inflation (PPI) data, followed later by the US ISM Services PMI. We will also hear from the BoE’s Mann and ECB President Lagarde. On Tuesday, attention shifts to China’s foreign exchange reserves and the US trade balance. The NATO summit, running through to Wednesday, may also attract market interest given its potential geopolitical implications. Wednesday is relatively light on economic data, with the main focus on the release of the FOMC meeting minutes, which could provide further insight into the Fed’s policy outlook. Thursday brings China’s CPI and PPI and, in the US, investors will monitor weekly jobless claims and existing home sales. Fed officials Williams and Logan, and the BoE’s Breeden, are scheduled to speak at an event on the Future of Market Liquidity and Functioning. The week concludes with Germany’s final CPI reading. ECB policymakers Vujčić and Stournaras are due to speak, providing further guidance on the Eurozone policy outlook.
The primary catalyst for markets during the holiday-shortened week was a marked cooling in the US labour market, which significantly eased investor concerns for further Fed tightening. The closely watched Non-Farm Payrolls report showed the US economy added just 57k jobs in June, well below consensus expectations of around 110k. The disappointment was compounded by downward revisions to previous months’ payroll figures and a softer-than-expected ADP private employment report, which showed 98,000 jobs added (exp. +120k).
Elsewhere, US macroeconomic data pointed to a gradually moderating economy. The Institute for Supply Management (ISM) Manufacturing PMI eased modestly to 53.3 but remained firmly in expansion territory, while the Conference Board’s Consumer Confidence Index stayed subdued at 91.2. Collectively, the data prompted markets to sharply reassess the near-term interest rate outlook, with implied odds of a July Fed rate hike falling to around 19%.
Improving expectations for a less restrictive monetary policy backdrop helped fuel gains across US equities. The S&P Index rose 1.76%, shrugging off a sharp bout of mid-week profit-taking that weighed heavily on semiconductor stocks. Treasury markets experienced volatility throughout the week, before retreating after the weak employment data encouraged renewed buying of government bonds. The 10-year benchmark rose 11bps to 4.49%. Brent crude was marginally unchanged at ~$72pb, easing supply concerns combined with weaker near-term demand expectations helped anchor prices. Meanwhile, the US dollar (DXY Index) fell around 0.49% reflecting reduced expectations for further Fed tightening.
In China, policy developments remained the dominant market theme. The National Development and Reform Commission (NDRC) announced it had fully deployed its CNY 200bn (approximately US$29.4 billion) allocation of ultra-long special treasury bonds earmarked for industrial equipment upgrades and consumer goods trade-in programmes during 2026. The targeted fiscal stimulus helped drive a 9.3% year-on-year increase in machinery and equipment investment during the first five months of the year, partially offsetting softer household consumption.
Although broader economic momentum has moderated amid persistent global trade headwinds, China’s sizable trade surplus and resilient high-tech manufacturing sector continue to provide important structural support. Against this backdrop, the renminbi remained broadly stable against a weakening US dollar, underpinned by Beijing’s measured policy approach and growing market expectations that additional consumer-focused stimulus measures could be introduced later this year.