Uddrag fra saxobank:
What are we watching next?
US yields and US dollar as FOMC to deliver another 75-basis-point hike Wednesday. Guidance from the Fed is key after recent data suggests headwinds for the economy are picking up, even if inflation remains the Fed’s chief focus and the Fed is priced to deliver at least a 75-basis-point hike tomorrow (78 basis points priced in, meaning a small minority are betting on a 100-bp move).
The reaction of US yields to Fed policy will be key to watch this week after yields dropped sharply late last week on rising recession concerns from weak economic data. If Powell stays more hawkish than expected, which is needed to bring inflation back down, it could mean another run higher in yields and the US dollar, weighing on risk assets and commodities.
The possibility of weaker signals on economic growth in the week also possibly hints at further yield curve inversion this week, after this month saw the US 2-10 yield curve inverting the most (below –20 basis points) since 2000.
China’s Xi Jinping and US President Biden to speak this week as Taiwan tensions mount. US President Biden claims that he still intends to speak with Chinese leader Xi Jinping this week, though no date has been set. The talk comes as tensions mount on House Speaker Nancy Pelosi’s ambiguous plans to visit Taiwan in coming weeks and how China would respond to such a move as Chinese military aircraft activity in the area has picked up sharply of late and the country has issued sharp rhetorical warnings on the threat a Pelosi visit would represent to the “One China” policy.
Emergency meeting of EU energy ministers today. They will discuss the European Commission’s proposal to cut gas use by 15 % from next month. In a draft proposal, EU countries suggested that this target should take into account each state’s dependency on Russian gas as well as the amount they managed to funnel into storage. The reduction should also be less if a member country has extra gas it could supply to others in the EU either via LNG shipments or pipelines. Certain industries could be exempt as well.
The IMF publishes its updated economic outlook. Expect GDP forecasts to be revised downward, especially for 2022 in the eurozone. The latest July eurozone PMI indicators and the July German IFO business climate index (out at 88.6 versus forecast at 90.1) confirm the economy is decelerating very fast with risks tilted to the upside that it enters into a recession this year. In our view, energy rationing is one of the main issues facing the eurozone this year.
LVMH and Michelin will release their semi-annual results today. Despite a strong exposure to the Chinese market (which is decelerating due to the zero Covid policy), the French luxury group (owner of Céline, Givenchy, Christian Dior, Chaumet etc.) is likely to post another solid performance. It is able to pass on inflation to consumers. This is a major advantage in the current macroeconomic situation. The multinational tyre manufacturing company Michelin is in a tougher spot. The share is down 21 % YTD on the Paris Stock Exchange. Investors are wondering whether it can pass on the increase in the cost of production to buyers. This is far from certain.
Earnings Watch Calendar
The first major mega-caps of note are up today as Alphabet and Microsoft report earnings after the close, but a variety of companies are set to report today.
- Today: Alphabet, Microsoft, Visa, LVMH, Mondelez, Coca-Cola, McDonald’s, UPS, Texas Instruments, Raytheon Technologies, Unilever, Christian Dior, General Electric, UBS Group, General Motors, Archer-Daniels-Midland, Southern Copper, DSV, UniCredit
- Wednesday: Meta, Bristol-Myers Squibb, Qualcomm, Equinor, GSK, ServiceNow, Rio Tinto, Boeing, Airbus, 3M, Kering, Humana, Mercedes-Benz, Ford Motor, Kraft Heinz, Shopify, BASF, Danone, Fanuc, Enphase Energy, Spotify, Garmin
- Thursday: Apple, Amazon, Nestle, Pfizer, Merck, L’Oreal, Shell, Comcast, Intel, Linde, TotalEnergies, Sanofi, Honeywell, Anheuser-Busch InBev, Keyence, Volkswagen, Air Liquide, Schneider Electric, Banco Santander, Valero Energy, Stellantis, Neste, BAE Systems, Arcelor Mittal, Mastercard
- Friday: Exxon Mobil, Procter & Gamble, Chevron, AbbVie, AstraZeneca, Sony, Colgate-Palmolive, BNP Paribas
Economic calendar highlights for today (times GMT)
- 1200 – Hungary Central Bank Rate Decision
- 1300 – US May S&P CoreLogic House Price Index
- 1300 – US Jul. Richmond Fed Manufacturing Index
- 1400 – US Jul. Consumer Confidence
- 1400 – US Jun. New Home Sales
- 0130 – Australia Q2 CPI
