For now, the fragile truce in the Middle East appears to be holding, though weekend incursions underscore how precarious the situation remains. Reports suggest Iranian forces have tightened control over vessel movements in the Strait of Hormuz, with some ships now requiring explicit Iranian clearance to transit.
A US-Iran meeting in Qatar this week is expected to focus on restoring the ceasefire and reopening shipping routes.
In Europe, attention turns to the ECB’s annual Sintra conference in Portugal, where remarks from President Christine Lagarde, Fed Chair Kevin Warsh and Bank of Canada Governor Tiff Macklem will be closely watched for fresh policy signals.
In the US, focus also falls on the long-awaited Supreme Court decision over whether Lisa Cook can remain on the Federal Reserve Board while litigation over her dismissal continues. Barclays said the most likely outcome is that the court leaves the existing injunction in place, allowing Cook to continue serving.
On the data front, a US bank holiday on Friday for Independence Day means June’s nonfarm payrolls report will be brought forward to Thursday.
Societe Generale also noted that in France, the governing bodies of both the Socialist Party and the Greens are due to meet separately this week to discuss strategy ahead of the next presidential election.
We expect China’s official NBS manufacturing PMI to edge down to 49.9 in June from 50.0 in May, signalling continued softness in factory activity. By contrast, the private RatingDog manufacturing PMI is seen rising to 52.1 from 51.8, supported by firmer export momentum and stronger high-frequency trade indicators.
The NBS non-manufacturing PMI is forecast to slip to 49.9 from 50.1, with services activity likely easing as the temporary boost from the Labour Day holiday fades. Construction activity is also expected to remain subdued, with summer heatwaves and heavy rainfall disrupting outdoor work. Meanwhile, the RatingDog services PMI is projected to fall to 52.9 from 54.4 in May.
Economists at HSBC said they expected consumer prices (the national measure) to stay flat in June (0.04% m/m), bringing the annual rate to 2.7%. Crude oil has softened significantly, even before the US-Iran deal announcement, which could lead to a sharp drop in motor fuel and heating oil prices. Pulling in the other direction could be an increase in food prices, following a very soft May print, and a seasonal uptick in package tour prices.
12:30 - Canada Real GDP (Apr) Consensus: M/M 0.4% (prev -.01%)
TD Securities forecast industry-level GDP to rise by 0.4% m/m in April to match flash estimates, underpinned by large contributions from manufacturing and natural resources and more modest gains for services. “A 0.4% print puts Q2 GDP on a much stronger footing even with the poor handoff from March, while new flash estimates should show some moderation towards 0.1-0.2% in May.”
23:50 - Japan Tankan Mfg Index (Q2) Consensus: Q/Q 16 (prev 17)
Barclays said the Tankan report was likely to show weaker sentiment in manufacturing due to higher energy prices, firm sentiment in non-manufacturing on support from strong consumption, upward capex revisions on a par with the previous year and stronger inflation expectations due to the timing of survey response collection (prior to the recent oil price pullback).
Nomura said “We forecast euro area HICP inflation to dip by 0.1pp to 3.1% y/y in June. Inflation fixings are pricing 2.9-3.0% as likely. The moderation in headline inflation is due to energy prices. Importantly for the ECB, we believe core HICP inflation and services HICP inflation are likely to rise marginally (0.1pp each, to 2.7% and 3.6% respectively).”
Citi analysts question whether, after a strong spring, expect payroll growth to slow to a modest 25k in June as the labour market remains in a low churn dynamic. “The recent strength in payrolls may reflect shifted hiring patterns, rather than sustained improvement in demand for workers. We expect the unemployment rate to remain unchanged at 4.3% but with two-sided risks. Wage growth continues to cool to around 0.2% m/m and 3.4% y/y. signalling limited labour market tightening.”
For now, the fragile truce in the Middle East appears to be holding, though weekend incursions underscore how precarious the situation remains. Reports suggest Iranian forces have tightened control over vessel movements in the Strait of Hormuz, with some ships now requiring explicit Iranian clearance to transit.
A US-Iran meeting in Qatar this week is expected to focus on restoring the ceasefire and reopening shipping routes.
In Europe, attention turns to the ECB’s annual Sintra conference in Portugal, where remarks from President Christine Lagarde, Fed Chair Kevin Warsh and Bank of Canada Governor Tiff Macklem will be closely watched for fresh policy signals.
In the US, focus also falls on the long-awaited Supreme Court decision over whether Lisa Cook can remain on the Federal Reserve Board while litigation over her dismissal continues. Barclays said the most likely outcome is that the court leaves the existing injunction in place, allowing Cook to continue serving.
On the data front, a US bank holiday on Friday for Independence Day means June’s nonfarm payrolls report will be brought forward to Thursday.
Societe Generale also noted that in France, the governing bodies of both the Socialist Party and the Greens are due to meet separately this week to discuss strategy ahead of the next presidential election.
All Times Are GMT
Speakers: ECB’s Lagarde | BoE’s Pill
01:30 - Mainland China Manufacturing /Non-Manufacturing PMI (Jun)
Consensus: 50.1 (prev 50.)/ 49.9 (prev 50.1)
We expect China’s official NBS manufacturing PMI to edge down to 49.9 in June from 50.0 in May, signalling continued softness in factory activity. By contrast, the private RatingDog manufacturing PMI is seen rising to 52.1 from 51.8, supported by firmer export momentum and stronger high-frequency trade indicators.
The NBS non-manufacturing PMI is forecast to slip to 49.9 from 50.1, with services activity likely easing as the temporary boost from the Labour Day holiday fades. Construction activity is also expected to remain subdued, with summer heatwaves and heavy rainfall disrupting outdoor work. Meanwhile, the RatingDog services PMI is projected to fall to 52.9 from 54.4 in May.
12:00 - Germany HICP (Jun P)
Consensus: Y/Y 2.7% (prev 2.6%)
Economists at HSBC said they expected consumer prices (the national measure) to stay flat in June (0.04% m/m), bringing the annual rate to 2.7%. Crude oil has softened significantly, even before the US-Iran deal announcement, which could lead to a sharp drop in motor fuel and heating oil prices. Pulling in the other direction could be an increase in food prices, following a very soft May print, and a seasonal uptick in package tour prices.
12:30 - Canada Real GDP (Apr)
Consensus: M/M 0.4% (prev -.01%)
TD Securities forecast industry-level GDP to rise by 0.4% m/m in April to match flash estimates, underpinned by large contributions from manufacturing and natural resources and more modest gains for services. “A 0.4% print puts Q2 GDP on a much stronger footing even with the poor handoff from March, while new flash estimates should show some moderation towards 0.1-0.2% in May.”
23:50 - Japan Tankan Mfg Index (Q2)
Consensus: Q/Q 16 (prev 17)
Barclays said the Tankan report was likely to show weaker sentiment in manufacturing due to higher energy prices, firm sentiment in non-manufacturing on support from strong consumption, upward capex revisions on a par with the previous year and stronger inflation expectations due to the timing of survey response collection (prior to the recent oil price pullback).
Speakers: RBA Minutes | ECB’s Lane, Vujčić, Schnabel, Elderson, Cipollone
09:00 - Eurozone HICP (Jun F)
Consensus: Y/Y 3.0% (prev 2.9%)
Nomura said “We forecast euro area HICP inflation to dip by 0.1pp to 3.1% y/y in June. Inflation fixings are pricing 2.9-3.0% as likely. The moderation in headline inflation is due to energy prices. Importantly for the ECB, we believe core HICP inflation and services HICP inflation are likely to rise marginally (0.1pp each, to 2.7% and 3.6% respectively).”
Speakers: ECB’s Lagarde, Lane, Vujčić, Cipollone | Fed’s Warsh | BoC’s Macklem
12:30 - US Nonfarm payrolls (Jun)
Consensus: M/M 115k (prev 172k)
Citi analysts question whether, after a strong spring, expect payroll growth to slow to a modest 25k in June as the labour market remains in a low churn dynamic. “The recent strength in payrolls may reflect shifted hiring patterns, rather than sustained improvement in demand for workers. We expect the unemployment rate to remain unchanged at 4.3% but with two-sided risks. Wage growth continues to cool to around 0.2% m/m and 3.4% y/y. signalling limited labour market tightening.”
Speakers: BoE’s Mann | ECB’s Cipollone, Elderson
Speakers: ECB’s Lagarde, Nagel, Makhlouf | BoE’s Bailey