Written Commentary
ADM Appoints Jeff Rowe as EVP and COO
July 20, 2026
USA/Iran attack pause founders once again; focus on Fed and very busy run of corporate earnings headlined by Meta, Microsoft, Qualcomm and SK Hynix; digesting Australian CPI, also awaiting Ireland Q2 GDP and Canada BoC ‘minutes’.
- U.S.A.: Fed expected to hold, but solid case for rate hike, expect dissent in favour of hike; Warsh’s deliberate ambiguity a potential risk to financial stability.
EVENTS PREVIEW
The pause in US/Iran attacks has yet again proven to be short-lived, with negotiations on Strait of Hormuz traffic also failing. The focus today will be on the Fed meeting and a barrage of corporate earnings from around the world. Earnings highlights in Asia include Nomura, Rio Tinto, SK Hynix and United Microelectronics; in Europe: ARM, BASF, Deutsche Bank, Endesa, Eni, Intesa Sanpaolo, Standard Chartered, Telefonica and UBS. Across the pond, Meta and Microsoft headline, though Bunge Global, Qualcomm and Starbucks will also be among the headline makers. A lighter day statistically features Australian Q2 and June CPI (somewhat better than expected, and likely to stay the RBA’s rate hiking hand at its next meeting), advance Q2 GDP from Belgium, Sweden and the big wildcard for the Eurozone: Ireland which is expected at -3.8% y/y from Q1’s -13.0% y/y (see GDP qtr/qtr chart attached), and also has UK Consumer Credit and Mortgage Lending, and the ECB’s Wage Tracker. The very sharp reaction to the SK Hynix’s profits ‘miss’, despite the fact that profits rose six-fold, is testament to the high bar for Q2 earnings reports, even if the inherent volatility, hefty distortion from sector ETFs and lack of liquidity relative to US markets does have to be acknowledged.
** U.S.A. – FOMC meeting **
The weaker than expected CPI data, and tomorrow’s expected dip in June PCE deflators, gives the Fed some breathing space on rates, though the fact remains that the US core PCE deflator will then have been above 2.0% since March 2021, and for much of that time not by a small margin. Indeed, there is an argument that the Fed might want to go early on a rate hike, given the increasing proximity of the November mid-term elections puts it under some pressure. As we are aware, Mr Warsh is against forward guidance, but he will still be keen to brandish his inflation fighting credentials and likely reprise and strengthen the line that ‘inflation is too high’, though there is only so long that he can credibly run with that line of argument without taking action, especially as markets are now fully discounting a September rate hike, and given inflation is set to rebound sharply in coming months on the back of the energy price rises.
In light of the renewed surge in energy prices and the likelihood that Thursday’s Q2 GDP will show stronger domestic demand, with labour demand stable, it also seems probable that there will be dissenting votes (Logan, Hammack?) for a rate hike and will probably be taken by some market participants as confirming a high chance of a September move. The substantive risk is that Warsh’s deliberate ambiguity on the rate outlook creates more volatility, which in markets where margin debt and leverage are high, valuations remain challenging and an array of economic and geopolitical uncertainties remain the ‘norm’, poses a risk to financial stability.
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