Macroeconomics: The Day Ahead for 14 July 2026

Perhaps befitting France’s Bastille Day, there is a riotous assembly of geopolitical news, major data, US Q2 earnings and scheduled events for markets to digest today. Tensions and mutual attacks continue to escalate in the Persian Gulf and serve to unseat the always risky consensus bearish trade on oil that emerged on the back of the short-lived US/Iran MoU. The fact is that while a medium-term view that there is likely to be a supply surplus for both oil and gas, there is little to suggest that output and delivery (above all of refined products) will return to normal in the near-term, and that this conflict is now overridingly about control of the Strait of Hormuz, with little to suggest that the various parties (i.e. including the GCC countries) are capable of reaching an agreement on a long-term stable and secure solution. Statistically, there are China’s Trade, Singapore Q2 prov. GDP, UK BRC Retail Sales and India’s WPI to digest, though the primary focus will be on US CPI. The first of two days of Warsh’s semi-annual testimony to Congress dominates the central bank speaker agenda, which also has BoE FPC testimony and BoE’s Bailey making his annual Mansion House address. Last but certainly not least, 5 of the 6 major US banks get the Q2 earnings season into gear.

** China – June Trade Balance, Q2 GDP **

Today’s (again) much stronger-than-expected exports and Imports cannot be taken out of context of tomorrow’s Q2 GDP and monthly activity data. The strength of exports, primarily thanks to AI investment related demand, appears likely to continue into H2, but the jump in Imports does not signal improving domestic demand. Notably, Crude Oil Imports continued to fall to their lowest level in 10 years, with NatGas imports also down 3.4% y/y, with a surge in Coal Imports underlining the shift in China’s power supply mix, with a jump in Soybean and, to a lesser extent, Iron Ore imports also a significant contributor. While this hints at a slight upside risk to expectations of a 0.9% q/q rise in Q2 GDP, it will still slow quite sharply from Q1’s 1.3%, in turn bringing the y/y rate down to 4.5%. Monthly data will likely show that a deepening slide in Fixed Asset Investment (median -5.0% vs. May -4.1%) and a marginal contraction in Retail Sales (-0.1% y/y) continue to be the key contributors to very weak domestic demand, along with the long-term millstone of a sharp contraction in Property Investment (expected at -16.8% y/y), which a moderate 4.6% y/y increase in Industrial Production can only modestly offset. The details on the latest 5-year plan highlight plans to boost services consumption, concentrating on improving affordable housing availability, the ‘silver’ economy, child and healthcare, and reducing red tape for leisure and cultural activities, via way of increased social transfers (benefits), for which there is a clear need given that these account for 13% of spending in China by comparison with 30% in the EU. As much as the target of raising Retail Consumer Spending to CNY 60.0 Trln by 2030 from the current CNY 50.0 Trln looks impressive, it implies an annual growth rate in Retail Sales of 3.7% y/y in the 2026-2030 period, which compares with 5.0% y/y for 2020-2025. Given that so many prior initiatives to boost consumer spending and the services sector of the domestic economy have had little lasting impact, this will be another case of ‘the proof of the pudding is in the eating’, and without measures to more forcefully address property sector woes, would appear unlikely to deliver the desired results.

** U.S.A. – June CPI, Warsh Semi-annual Testimony

CPI is expected to ease, with a sharp drop in gasoline prices expected to edge headline lower by -0.1% m/m, and the y/y rate down to a still lofty 3.8% from 4.2%, though core is seen up a very average 0.2% m/m to keep the y/y rate unchanged at 2.9%, due to upward pressure from hotels, leisure and airfares due to the World Cup, and consumer electronics due to rising memory chip prices. As for Warsh’s testimony, this may prove to be a ‘nothing burger’, both due to his rejection of forward guidance on the policy outlook, the fact that he did not even sign the written monetary policy report, and his previously well documented aversion to answering any politically motivated questions. As such, yesterday’s ‘guidance’ from Waller that if core CPI does not start to decelerate, then rates may well have to rise, and his clear defiance of Warsh with the comment: “You want the markets to have as much information as possible” underlines the FOMC has a hawkish bias and remains divided both on the policy outlook and how to recalibrate policy formation.