This Week Focus Point 25-29 July 2022

This Week Focus Point 25-29 July 2022

With the Fed’s decision, the Q2 GDP growth rate, and earnings reports for more than a third of the S&P 500 businesses taking center stage, it will be the busiest week of the summer in the US. The biggest economies in the Eurozone, including Germany, France, Italy, and Spain, will also release significant statistics on growth and inflation.

With the FOMC decision, earnings, and economic data taking center stage, it will be a very busy week in the US. Expectations point to the Fed raising rates for a second consecutive time by 75 basis points, which would bring borrowing costs to their highest level since 2019. Additionally, almost a third of the S&P 500 businesses, including Apple, Microsoft, Google parent Alphabet, Amazon, Meta Platforms, 3M, Boeing, Ford, and Intel, will announce quarterly results. On the data front, the preliminary estimate of GDP is anticipated to reveal that the American economy expanded by an annualized 0.4 percent in Q2, reversing a Q1 drop of 1.6 percent. Several regional indicators, such as the Chicago, Dallas, Richmond, and Kansas Fed Manufacturing Index and Chicago PMI, the S&P/Case-Shiller and FHFA house price indexes, the CB consumer confidence index, new and pending home sales, and durable goods orders are also significant releases.

It will be fascinating to monitor the monthly GDP figures for Canada, the mid-month inflation, producer prices, and unemployment rate for Brazil, and the preliminary GDP growth rates and trade data for Mexico.

The biggest economies in the Eurozone—Germany, France, Italy, and Spain—will publish significant statistics on growth and inflation rate. The bloc’s economy is anticipated to grow by a marginal 0.1 percent in the second quarter but the outlook remains dismal after the ECB launched its tightening cycle as record inflation levels started lowering families’ purchasing power.

In July, the inflation rate for the Euro Area is predicted to increase to a new high of 8.7 percent. At the same time, business sentiment most certainly hit a 2-year low and German consumer sentiment is expected to reach a record low heading into August. Data on employment will also be released for Germany, France, and Spain. Other important data include the Eurozone business survey, the second-quarter GDP for Sweden, the KOF leading indicators and retail sales for Switzerland, and the manufacturing and international trade confidence indicators for Turkey. The Bank of England’s monetary indicators and the CBI gauges for factory orders, business optimism, and distributive sales will be the only economic reports released in the UK this week.

For the Asia Pacific area, Japan will be publishing a ton of data, such as figures on the unemployment rate for June, retail sales, industrial output, and consumer sentiment for July. The annual inflation rate in Australia is predicted to reach 6.3 percent for the quarter ending in June, the highest level since 1990, prompting the Reserve Bank of Australia to increase interest rates by 75 basis points. Also announced will be June retail sales and Q2 producer pricing. The emphasis will be on China’s industrial earnings and foreign FDI. Last but not least, it is predicted that South Korea’s Q2 GDP numbers will show slow growth.