Weekly Outlook: 1 July – 5 July 2024


Weekly Outlook: 1 July – 5 July 2024

We have a very busy week ahead with the highlights including the US ISM PMIs, the Eurozone CPI, Fed Chair Powell and the US jobs data.


  • Monday: China Caixin Manufacturing PMI, Swiss Retail Sales, US ISM Manufacturing PMI.
  • Tuesday: RBA Meeting Minutes, Eurozone CPI, Eurozone Unemployment Rate, Canada Manufacturing PMI, US Job Openings, Fed Chair Powell.
  • Wednesday: Australia Retail Sales, China Caixin Services PMI, Swiss Manufacturing PMI, Eurozone PPI, US ADP, US Jobless Claims, US ISM Services PMI, FOMC Meeting Minutes.
  • Thursday: US Holiday, Swiss Unemployment Rate, Swiss CPI, ECB Meeting Minutes, Canada Services PMI, UK General Election.
  • Friday: Eurozone Retail Sales, Canada Labour Market report, US NFP.



The early consensus anticipates the June ISM manufacturing PMI to slightly increase to 49.0 from 48.7 in May, though it will remain below the 50-mark indicating contraction. The services measure is expected to decline to 52.0 from 53.8. S&P Global's PMI data showed the US economy gaining further growth momentum in June. According to the report, "Manufacturing output expanded and has performed better in the S&P Global surveys than recent data from other surveys have indicated, though it lost some pace in June, highlighting ongoing struggles in the sector amid weak demand."

The report also noted positive developments in the service sector, which experienced its fastest growth in over two years. "Markets will be keen to examine the ISM survey data... though this ISM survey has shown volatility in recent months, urging caution in interpreting its signals," it added.



The RBA will release the minutes from its June 17th-18th meeting, during which the central bank kept the Cash Rate unchanged at 4.35%, in line with unanimous forecasts from a recent Reuters poll. The RBA's statement did not contain any major surprises and reiterated the Board's determination to return inflation to its target. The central bank maintained a hawkish stance, emphasizing that inflation remains above target and is proving persistent, although it is easing more slowly than expected.

The RBA noted that the future path of interest rates needed to ensure inflation returns to target remains uncertain, and the Board is not ruling anything in or out. The announcement and statement had little impact on the markets. During the press conference, RBA Governor Bullock's comments were balanced, indicating that significant progress is required to bring inflation back within range. She mentioned that the board had discussed the possibility of a rate hike at the meeting, but she would not say that the case for a hike is increasing. Bullock suggested that the Board's emphasis on vigilance towards upside inflation risks does not necessarily imply an imminent rate rise.

Given the more recent, firmer-than-expected monthly Australian CPI data, which has increased rate hike bets, the upcoming minutes may be viewed as somewhat outdated. Currently, money markets are pricing a 34% probability of a 25bps hike at the next meeting in August.



Expectations for June’s headline year-over-year inflation are for a slight decrease to 2.5% from 2.6%, with core and super core inflation both anticipated to drop to 2.8% from 2.9%. In the previous release, headline inflation saw an uptick due to a combination of base effects and significant increases in services inflation in several major nations.

Oxford Economics anticipates a “very small decline” in both headline and core inflation this time. While this is encouraging, they do not believe it will be sufficient for the ECB to consider cutting rates again at their July policy meeting, given the lack of progress in other indicators like services inflation and wage growth.

Ahead of the Eurozone-wide metrics due on Tuesday, regional releases from France, Italy, and Spain indicate that “euro-zone headline inflation edged down in June, while core and services inflation held broadly steady,” according to Capital Economics.

Current market pricing for the ECB suggests a 40% chance of a rate cut next month, an 84% chance of a reduction in September, a 25bps cut fully priced in for November, and a total of 46bps of easing expected by year-end.



The Fed recently left rates unchanged, as anticipated, but the updated dot plots now indicate only one rate cut in 2024, compared to the three projected in March. Market expectations and analysts had been anticipating two rate cuts in 2024. Notably, four policymakers foresee no rate cuts this year, seven predict just one reduction, and eight expect two cuts.

Looking ahead, the 2025 median dot plot stands at 4.1%, up from 3.9% in March, while the 2026 dot remains unchanged at 3.1%. The longer-run rate ticked up to 2.8% from the previous 2.6%. Additionally, projections for headline and Core PCE were raised for 2024 and 2025, with 2026 remaining unchanged. Unemployment projections were kept at 4.0% for 2024 but increased by 0.1% for both 2025 and 2026, to 4.2% and 4.1%, respectively. Real GDP growth forecasts remained unchanged.

The statement saw minimal changes, only acknowledging "modest further progress" towards the 2% inflation goal, compared to May's statement which noted a "lack of progress." Recent Fed commentary has emphasized a data-dependent approach, indicating that more definitive progress on inflation is needed before they can be confident it will sustainably return to target levels, which would then make them comfortable endorsing rate cuts. Fed's Bostic suggested that once the Fed is confident inflation will return to target, a series of rate cuts could follow, aligning with the median view of one rate cut in 2024 and four in 2025.

The upcoming Minutes will be scrutinized for insights into the members' thoughts on the rate cut process and their views on recent inflation progress. In May, the Fed announced a tapering of its balance sheet reduction from USD 60 billion per month to USD 25 billion per month. Although there was no adjustment to this in June, Fed's Mester (who is retiring) mentioned openness to active sales of MBS at some point, so any discussion around the Fed's balance sheet will also be noteworthy.



The upcoming print follows the SNB's rate cut in June, which was justified by a quarterly decrease in underlying inflation data. In June, the SNB maintained its Q2-2024 CPI Y/Y forecast at 1.4%. With April and May prints both at 1.4%, another reading of the same level is expected. In May, inflation was primarily driven by rising housing rental prices (with the next update in August) and higher petrol prices, while accommodation and heating costs moderated.

June's release, if in line with expectations, is unlikely to significantly impact the SNB's next move, as the first two Q3 readings will be more influential. The SNB continues to forecast a slight uptick in the Q3 average to 1.5%. The extent of this increase will likely determine if the SNB opts for another rate cut in September, which will be Chairman Jordan’s final meeting.


On Thursday, 4th July, UK voters will head to the polls to elect their next government, with the exit poll expected to be released at 22:00 BST across major UK news outlets. Current polling suggests a strong Labour majority, with the party projected to secure around 42% of the vote share. Given the strong polling in favour of a Labour victory, such an outcome is largely already priced in. If the exit poll is conclusive at 22:00 BST, any movement in the GBP may be brief (note that Gilts and the UK equity market will be closed at this time).

Following the election, attention will shift to the budgetary measures a Labour government might implement. Key economic policies within Labour’s manifesto include keeping taxes low and not introducing new tax increases beyond those already announced (on energy company profits, private school fees, and private equity bonuses). The macroeconomic focus is on "securonomics," aiming for economic stability with strict spending rules. Additionally, the party plans to establish the Office for Value for Money and enhance the role of the Office for Budget Responsibility (OBR).

However, there are concerns that the current costings under Labour’s spending plans are insufficient, raising questions about whether additional tax increases would be necessary as part of an Autumn budget. From a monetary policy perspective, the election is not expected to impact the BoE's rate easing plans due to the limited scope for fiscal adjustments.

Alternative election outcomes include a small Labour majority, a hung parliament, or an unlikely Conservative victory. These scenarios are explored in more detail in our event preview, available in the research suite on our website.



The rate of headline payrolls growth is expected to cool to +180k in June, down from +272k in May, with three-month, six-month, and twelve-month averages of 249k, 255k, and 230k, respectively. The unemployment rate is anticipated to remain unchanged at 4.0% (the Fed's June Summary of Economic Projections forecasts a rate of 4.0% for this year, rising to 4.2% next year). Average hourly earnings growth is expected to pare back to +0.3% M/M from +0.4% in May.

Analysts have observed weakening indicators of consumer health recently, including an uptick in unemployment claims, soft retail sales data, and cautious consumer sentiment. Oxford Economics noted that "initial claims suggest that the gain in nonfarm employment in May won’t be duplicated in June, and the risks to the labor market should be garnering attention from the Fed." They pointed out that the softening in job growth has primarily been driven by a deceleration in hiring due to reduced labor demand, with the job openings rate having declined noticeably, although this has not yet led to a significant rise in the unemployment rate.

Regarding continuing claims, Oxford Economics highlighted that in the week coinciding with the BLS jobs report survey window, continuing claims rose to the highest level since late 2021. While the increase in continued claims suggests a moderation in job growth, it also noted that increases in claims in California and Minnesota, which accounted for more than half of the total rise in continued claims, are likely due to noise rather than any underlying softening in the labor market.


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