Week ahead: US inflation stands out as Fed looks to September meeting

US inflation figures for July are the main event this week as markets look to see where the Federal Reserve is heading in September. Earnings season continues with Walt Disney, Peloton and Coinbase among the most traded stocks to watch.  

US inflation 

For most market participants the highlight this week is the US Consumer Price Index as markets look to what the Fed’s next move on interest rates in September might be. The CPI climbed 9.1% year-over-year through June, hitting a fresh 40-year high. The index was up a huge 1.3% in June from May, signalling to many that inflation has far from peaked. 

And whilst commodity prices have somewhat rolled over and inflation expectations have pulled back from their recent highs, actual inflation is expected to remain elevated for some time. 

Last week saw several FOMC members push back against the market’s apparent belief the Fed is ready to pivot to a more accommodative stance. San Francisco Fed president Mary Daly, normally quite dovish, said the US central bank was “nowhere near” done with raising rates, while Chicago Fed president Charles Evans said a 50bps hike in September would be appropriate but left the door open for 75bps. This saw a sharp selloff in the Treasury bond market as investors took it to mean the Fed is far from declaring victory in its war on inflation. 

US earnings season  

So far this earnings season US companies are beating on revenues, but guidance is generally lower. Among the large cap stocks to report this week are Palantir (PLTR), Barrick Gold (GOLD) and Viatris (VTRS), all on Monday. Later in the week watch out for German giants Deutsche Telekom and Siemens reporting their latest earnings, as well as Walt Disney (DIS), Roblox (RBLX), Peloton (PTON) and Coinbase Global (COIN).  

With about two-thirds of S&P 500 companies having reported, 69% are beating Q2 earnings (vs. 79% avg. last 4Qs) and 65% are beating revenue estimates (vs. 77%), according to JPMorgan analysis. 

Weekly unemployment claims 

Is the US labour market cracking? Last week’s JOLTS job openings declined to 10.7m, from 11.25m, and well below the 11m expected – the drop is 3rd biggest on record, with only Covid-era declines worse. With this in mind US weekly unemployment claims are the focus for Thursday. 

UK GDP  

UK growth held up better than forecast in May, but recent data has been soft as rising inflation hits home. Last week’s closely-watched services PMI slid to a 17-month low in July – Friday sees the latest GDP print for the month of June. 

Earnings calendar 

Economic calendar (BST)