The Federal Reserve meets this week to announce another bumper interest rate hike – the only question left for markets is whether it will be a 75bps move or 100bps. The advanced Q2 GDP reading will tell us whether the US is entering a technical recession and PCE inflation numbers will round out a big week for US data. Meanwhile earnings season on Wall Street hits full speed with tech giants like Apple, Alphabet and Meta and industrials like Boeing, Ford and Caterpillar. 

Federal Reserve 

Markets expect the Federal Open Market Committee (FOMC) to deliver another bumper rate hike after its meeting on July 26-27. The question is how big: markets expect a second 75bps but price a roughly one-in-three chance of a full percentage point increase in the Fed funds rate. The Fed will need to balance competing influences on policy thinking. Whilst nominal inflation continues to rise to 40-year highs and exceed expectations, inflation expectations and commodity prices have somewhat rolled over in the last month. And whilst the CPI inflation reading keeps trending higher, core PCE inflation has eased back. 

US GDP 

The advanced reading of US second quarter GDP growth is due Thursday. The Atlanta Fed’s GDPNow model estimate for real GDP growth in the second quarter of 2022 is -1.6 percent on July 19th, down from -1.5 percent on July 15th. If it were to do, it could signal the US economy has entered a technical recession, after first quarter GDP declined by 1.4% on an annualised basis.  

PCE Inflation 

The Fed’s preferred gauge of inflation, the core personal consumption expenditures (PCE) index, is released on Friday. Figures released at the end of June showed PCE inflation excluding food and energy fell to 4.7% year on year in May, down from 4.9% in April, with the core inflation reading having peaked at 5.3% in February. Headline PCE inflation was steady at 6.3% in May, down from a March peak of 6.6%.  

Megacap Earnings 

Earnings season hits full speed this week as the largest cap companies and a slew of Dow industrials post quarterly financials. So far about four in five companies on the S&P 500 that have reported topped analyst expectations. Thus far earnings have not been as bad as feared and that is allowing investors to see the glass half full after weeks of worry. Megcap tech is the highlight with Apple, Amazon, Alphabet, Meta and Microsoft on the tape. Meanwhile Dow components McDonald’s, Coca-Cola, 3M, Intel, Procter & Gamble, Chevron and Boeing are among the large cap companies delivering earnings updates. 

 

Earnings calendar 

25.07	26.07	27.07	28.07	29.07
Newmont Corp (NEM)  PMO	3M Co (MMM)  PMO Coca-Cola Co (KO)  PMO General Electric (GE)  PMO General Motors (GM) PMO McDonald’s Corp (MCD)  PMO Advanced Micro Devices (AMD) E Alphabet Inc C (GOOG)  AMC Alphabet Inc A (GOOGL)  AMC Microsoft Corp (MSFT) AMC Mondelez (MDLZ)  AMC Visa Inc Class A (V)  AMC	Automatic Data Processing (ADP)  PMO Boeing (BA)  PMO Bristol-Myers Squibb (BMY)  PMO CME Group (CME)  PMO The Kraft Heinz Co (KHC)PMO Shopify (SHOP)  PMO Spotify Technology SA (SPOT)  PMO Ford Motor Co (F)  AMC Meta Platforms (FB)  AMC Teladoc Health (TDOC)  AMC Qualcomm Inc (QCOM)  AMC QuantumScape (QS) AMC	Keurig Dr Pepper (KDP)  PMO Mastercard (MA) PMO Merck & Co Inc (MRK)  PMO Pfizer (PFE)  PMO Takeda Pharmaceutical (TAK)  PMO Amazon.com Inc (AMZN) AMC Apple Inc (AAPL)  AMC Intel Corp (INTC)  AMC Roku Inc (ROKU) AMC	AbbVie (ABBV) PMO Aon (AON) PMO Chevron (CVX)  PMO Exxon Mobil (XOM) PMO Procter & Gamble (PG)  PMO

 

Economic calendar (BST) 

Mon Jul 25	9:00am	EUR	German ifo Business Climate
	11:00am	GBP	CBI Industrial Order Expectations
	2:00pm	EUR	Belgian NBB Business Climate
Tue Jul 26	12:50am	JPY	Monetary Policy Meeting Minutes
		JPY	SPPI y/y
	7:00am	EUR	German Import Prices m/m
	12:00pm	GBP	CBI Realized Sales
	2:00pm	USD	HPI m/m
		USD	S&P/CS Composite-20 HPI y/y
	3:00pm	USD	CB Consumer Confidence
		USD	New Home Sales
		USD	Richmond Manufacturing Index
Wed Jul 27	12:01am	GBP	BRC Shop Price Index y/y
	2:30am	AUD	CPI q/q
		AUD	Trimmed Mean CPI q/q
	6:00am	JPY	BOJ Core CPI y/y
	7:00am	EUR	German GfK Consumer Climate
	9:00am	CHF	Credit Suisse Economic Expectations
		EUR	M3 Money Supply y/y
		EUR	Private Loans y/y
	Tentative	EUR	German 10-y Bond Auction
	1:30pm	USD	Core Durable Goods Orders m/m
		USD	Durable Goods Orders m/m
		USD	Goods Trade Balance
		USD	Prelim Wholesale Inventories m/m
	3:00pm	USD	Pending Home Sales m/m
	3:30pm	USD	Crude Oil Inventories
	7:00pm	USD	FOMC Statement
		USD	Federal Funds Rate
	7:30pm	USD	FOMC Press Conference
Thu Jul 28	2:00am	NZD	ANZ Business Confidence
	2:30am	AUD	Import Prices q/q
		AUD	Retail Sales m/m
	7:00am	EUR	German Retail Sales m/m
		GBP	Nationwide HPI m/m
	All Day	EUR	German Prelim CPI m/m
	8:00am	EUR	Spanish Unemployment Rate
	Tentative	EUR	Italian 10-y Bond Auction
	1:30pm	USD	Advance GDP q/q
		USD	Advance GDP Price Index q/q
		USD	Unemployment Claims
	3:30pm	USD	Natural Gas Storage
Fri Jul 29	12:30am	JPY	Tokyo Core CPI y/y
		JPY	Unemployment Rate
	12:50am	JPY	BOJ Summary of Opinions
		JPY	Prelim Industrial Production m/m
		JPY	Retail Sales y/y
	2:30am	AUD	PPI q/q
		AUD	Private Sector Credit m/m
	6:00am	JPY	Consumer Confidence
		JPY	Housing Starts y/y
	6:30am	EUR	French Consumer Spending m/m
		EUR	French Flash GDP q/q
	7:30am	CHF	Retail Sales y/y
	7:45am	EUR	French Prelim CPI m/m
	8:00am	CHF	KOF Economic Barometer
		EUR	Spanish Flash CPI y/y
		EUR	Spanish Flash GDP q/q
	8:55am	EUR	German Unemployment Change
	9:00am	EUR	Italian Prelim GDP q/q
		EUR	German Prelim GDP q/q
	9:30am	GBP	M4 Money Supply m/m
		GBP	Mortgage Approvals
		GBP	Net Lending to Individuals m/m
	10:00am	EUR	CPI Flash Estimate y/y
		EUR	Core CPI Flash Estimate y/y
		EUR	Italian Prelim CPI m/m
		EUR	Prelim Flash GDP q/q
	1:30pm	CAD	GDP m/m
		USD	Core PCE Price Index m/m
		USD	Employment Cost Index q/q
		USD	Personal Income m/m
		USD	Personal Spending m/m
	2:45pm	USD	Chicago PMI
	3:00pm	USD	Revised UoM Consumer Sentiment
		USD	Revised UoM Inflation Expectations