Macroeconomics: The Day Ahead for 02 July

The day’s calendar is relatively sparse as is typical for the second working day of the month, but with South Korea’s CPI and UK BRC Shop Prices to digest ahead of Eurozone provisional CPI, US JOLTS Job Openings and Auto Sales, it has a number of highlights. The events schedule is dominated by the ECB’s Sintra Forum on Central Banking, within which the policy panel with ECB’s Lagarde, Fed’s Powell and BCB’s Campos Neto will inevitably be the focal point. Govt bond supply takes the form of UK 3-yr and some rather very well seasoned zero interest coupon Bunds (2030 & 2050), which are doubtless being sold to alleviate a market short. The UK BRC Shop Price data underlined that goods disinflation remains in place, and while offsetting service price pressures, it also points to sluggish consumer spending.

** Eurozone – June Prov. CPI **

– While French HICP undershot forecasts, other national readings were broadly in line, and by extension offer little reason to expect the pan-Eurozone to be out of line with the consensus forecast of 0.2% m/m 2.5% y/y headline and 2.8% core, the latter y/y readings both down 0.1 ppt from May. The focus will inevitably be on the Services component, which thanks to the base effects in German public transport, jumped back up in May to 4.1% y/y from 3.7%, but should ease back modestly this month.

** U.S.A. – May JOLTS Job Opening & June Auto Sales **

– JOLTS Job Openings are expected to post a further relatively sharp fall to 7.864 Mln vs. April’s 8.059 Mln, and per se falling close to the top of the pre-pandemic range, with particular focus on the ‘quit rate’ as labour demand eases. If JOLTS do decelerate as expected, and if the Unemployment Rate on Friday ticked up to 4.1%, then one could reasonably expect Fed speakers to put greater emphasis on high for longer rates slowing labour demand. Otherwise, Auto Sales are seen marginally lower at 15.80 Mln, with some scope for a downside outlier due to the cyber-attack on auto dealerships’ CRM systems.