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The Fed’s preferred gauge of inflation, the core PCE index, is out this week as markets remain on edge about rising interest rates and signs of recession. There will also be data on US durable goods and manufacturing activity. On the earnings front, Nike is set to report. Also watch out for the G7 summit in Bavaria starting on Sunday, where leaders will discuss Ukraine, inflation and the price of oil. 

Inflation 

With market participants fixated on inflation, recession and what the Federal Reserve is doing, the main event this week is the PCE index release on Thursday.  Markets will be watching for any signs that price rises are slowing down. The core personal consumption expenditures (PCE) price index rose 4.9% from a year ago in April, down from 5.2% in March. Headline PCE rose just 0.2% month-on-month, well down from March’s 0.9% increase. 

Speaking last week, Fed chair Jay Powell admitted there were not any clear signs inflation was coming down just yet, but he did point to last month’s PCE index as a sign of hope. “Over coming months, we will be looking for compelling evidence that inflation is moving down, consistent with inflation returning to 2%,” Powell said. “We anticipate that ongoing rate increases will be appropriate; the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy.” 

Other releases to watch include, on Monday, US durable goods orders and pending home sales, followed by the CB Consumer Confidence survey on Tuesday. Then on Friday the ISM manufacturing report is due. 

Bank of England 

UK inflation rose to a new 40-year high in May, and is set to hit 11% later this year, according to the Bank of England. Little wonder that so many people in the market believe the BoE might need to go faster and further on hiking interest rates. So markets will be paying close attention to Governor Andrew Bailey on Wednesday, when he delivers a speech on “Challenges for monetary policy in a rapidly changing world” at the ECB forum for central banking, in Sintra. 

Nike earnings 

Retailer Nike is set to report 4th quarter earnings on Monday. Supply chain problems are likely to feature heavily as the company faces headwinds from lockdowns in China, whilst analysts have also cited the strong dollar as a drag. Morgan Stanley expects to see a Q4 earnings miss due to the “longer-than expected Covid-related” lockdowns. However, there should be some offsetting influence from the shift to direct-to-consumer, which is supporting margins. 

In the prior quarter reported in March, Nike shrugged off supply troubles to grow North American sales by 9%, apparently showing it can handle supply disruption and rising input costs. More direct-to-consumer sales is a big help. Digital sales in the last quarter rose 19% from the prior year, driven by 33% growth in North America. As a result, gross margins rose to 46.6% from 45.6% a year ago.  Earnings per share came in at $0.87 vs $0.71 expected on revenues of $10.87bn. 

 

Economic calendar 

Sun Jun 26 Day 1 All G7 Meetings 
Mon Jun 27 12:50am JPY BOJ Summary of Opinions 
 7:00am EUR German Import Prices m/m 
  EUR German Retail Sales m/m 
 Tentative EUR German Buba Monthly Report 
 Day 2 All G7 Meetings 
 1:30pm USD Core Durable Goods Orders m/m 
  USD Durable Goods Orders m/m 
 3:00pm USD Pending Home Sales m/m 
Tue Jun 28 Tentative NZD RBNZ Statement of Intent 
 6:00am JPY BOJ Core CPI y/y 
 7:00am EUR German GfK Consumer Climate 
 11:00am GBP MPC Member Cunliffe Speaks 
 Day 3 All G7 Meetings 
 1:30pm USD Goods Trade Balance 
  USD Prelim Wholesale Inventories m/m 
 2:00pm USD HPI m/m 
  USD S&P/CS Composite-20 HPI y/y 
 3:00pm USD CB Consumer Confidence 
  USD Richmond Manufacturing Index 
Wed Jun 29 12:01am GBP BRC Shop Price Index y/y 
 12:50am JPY Retail Sales y/y 
 2:30am AUD Retail Sales m/m 
 6:00am JPY Consumer Confidence 
 Tentative GBP Nationwide HPI m/m 
 All Day EUR German Prelim CPI m/m 
 8:00am EUR Spanish Flash CPI y/y 
 All Day EUR Italian Bank Holiday 
 9:00am CHF Credit Suisse Economic Expectations 
  EUR M3 Money Supply y/y 
  EUR Private Loans y/y 
 1:30pm GBP BOE Gov Bailey Speaks 
  USD Final GDP q/q 
  USD Final GDP Price Index q/q 
 3:30pm OIL Crude Oil Inventories 
 4:30pm USD FOMC Member Mester Speaks 
Thu Jun 30 12:50am JPY Prelim Industrial Production m/m 
 2:00am NZD ANZ Business Confidence 
 2:30am AUD Private Sector Credit m/m 
  CNH Manufacturing PMI 
  CNH Non-Manufacturing PMI 
 6:00am JPY Housing Starts y/y 
 7:00am GBP Current Account 
  GBP Final GDP q/q 
  GBP Revised Business Investment q/q 
 7:30am CHF Retail Sales y/y 
 7:45am EUR French Consumer Spending m/m 
  EUR French Prelim CPI m/m 
 8:00am CHF KOF Economic Barometer 
 8:55am EUR German Unemployment Change 
 9:00am EUR Italian Monthly Unemployment Rate 
 10:00am EUR Unemployment Rate 
 Tentative EUR Italian 10-y Bond Auction 
 1:30pm CAD GDP m/m 
  USD Core PCE Price Index m/m 
  USD Unemployment Claims 
  USD Personal Income m/m 
  USD Personal Spending m/m 
 2:45pm USD Chicago PMI 
 3:30pm NAT GAS Natural Gas Storage 
 11:30pm AUD AIG Manufacturing Index 
 11:45pm NZD Building Consents m/m 
Fri Jul 1 12:30am JPY Tokyo Core CPI y/y 
  JPY Unemployment Rate 
 12:50am JPY Tankan Manufacturing Index 
  JPY Tankan Non-Manufacturing Index 
 1:30am JPY Final Manufacturing PMI 
 2:45am CNH Caixin Manufacturing PMI 
 4:35am JPY 10-y Bond Auction 
 7:30am AUD Commodity Prices y/y 
 8:15am EUR Spanish Manufacturing PMI 
 8:30am CHF Manufacturing PMI 
 8:45am EUR Italian Manufacturing PMI 
 8:50am EUR French Final Manufacturing PMI 
 8:55am EUR German Final Manufacturing PMI 
 9:00am EUR Final Manufacturing PMI 
 9:30am GBP Final Manufacturing PMI 
  GBP M4 Money Supply m/m 
  GBP Mortgage Approvals 
  GBP Net Lending to Individuals m/m 
 10:00am EUR CPI Flash Estimate y/y 
  EUR Core CPI Flash Estimate y/y 
  EUR Italian Prelim CPI m/m 
 All Day CAD Bank Holiday 
 2:45pm USD Final Manufacturing PMI 
 3:00pm USD ISM Manufacturing PMI 
  USD Construction Spending m/m 
  USD ISM Manufacturing Prices 
 All Day USD Wards Total Vehicle Sales 

 

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