This week’s focus will be on Andy Burnham’s swearing-in as UK Prime Minister (Mon), the ECB’s policy decision (Wed), and US corporate earnings from the likes of Alphabet and Tesla (Tue), alongside ongoing geopolitical developments.
Today’s calendar features the US Conference Board Leading Index. Tuesday brings the German ZEW Economic Sentiment Survey and UK labour market data. UK CPI follows on Wednesday, when the ECB is widely expected to leave interest rates unchanged. On Thursday, attention turns to eurozone consumer confidence, US jobless claims, the Chicago Fed National Activity Index, and Intel earnings. The week concludes with global PMI releases, ECB inflation expectations, UK retail sales and US new home sales.
Last week, global markets were driven by a combination of heightened geopolitical tensions and a hawkish Fed rhetoric. Military escalation between the US and Iran, including the brief closure of the Strait of Hormuz, raised concerns over global energy supplies and renewed inflation risks.
Across asset classes, the S&P Index fell 1.55% amid concerns over unsustainable AI spending triggered a sell-off in major tech and semiconductor stocks coupled with a weakening in sentiment following US-Iran tensions. US Treasury yields were marginally lower as US inflation data eased, the 10-year benchmark closed the week at 4.55%. Meanwhile, the DXY Index closed 0.2% lower. Brent crude surged ~16% to $88pb on fears of supply disruption.
US economic data painted a mixed picture. June CPI and PPI figures provided a sign of relief for markets, showing a sharper-than-expected cooling of inflationary pressures. Meanwhile, retails sales grew modestly, marking the weakest monthly gain in five months.
During his first congressional testimony, Fed Chair Kevin Warsh forcefully reaffirmed the Fed’s independence, declared that the central bank has “no tolerance” for persistently high inflation, and marked a clear break from the Fed’s traditional forward-guidance approach by refusing to signal the likely path of future interest rate decisions.