Written Commentary
The Ghost in the Machine Q4 2023
November 28, 2023
Macroeconomics: The Day Ahead for 18 July
- July 18, 2022
- Marc Ostwald
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- Quiet start to data light week: digesting Singapore Exports, UK Rightmove House Prices, awaiting US NAHB Housing Market Index and Polish core CPI; BoE Saunders speech; Goldman Sachs, BofA and IBM top US earnings run; Italy govt crisis, Europe heatwave and gas supply; UK Tory leadership vote
- US NAHB Housing Market Index: further modest dip expected; purchase cancellations and high mortgage rates impart downside risks
- ECB and BoJ meetings, PMIs and Corporate Earnings in focus for the week
EVENTS PREVIEW
A very quiet start to the new week in data and event terms, with UK Rightmove House Prices and Singapore Exports to digest ahead of the US NAHB Housing Market Index and Polish core CPI, while BoE’s Saunders speech at the Resolution Foundation is the only item of note on the events schedule. The US Q2 earnings continues with financials still dominating via way of Bank of America and Goldman Sachs, and results from IBM also on tap. The week as a whole is relatively light in data terms (PMIs and other surveys and US Housing data), with the focus on the ECB and BoJ policy meetings, along with the Italy govt crisis, the extreme heat in Western Europe and whether Nordstream 1 gas flows from Russia to Europe will resume after the 10 day maintenance shutdown. While the BoJ has made it very clear that it has no intention of walking away from its current ultra-loose monetary policy stance, despite concerns about JPY weakness, the case for a more aggressive ECB move (i.e. 50 bps) on Thursday is strong given CPI is running 8.6% y/y headline and 3.7% y/y core, but with Rehn reaffirming the already signalled 25 bps in July and a 50 bps move in September last Friday, this looks unlikely. The bigger immediate policy and credibility challenge for the ECB is to deliver on its anti-fragmentation tool, given the political crisis in Italy. It is safe to say that the ECB cannot afford any slip ups in its communication, and it will doubtless reiterate its long held line on the Euro that it has no target for the currency, but is always sensitive to any sharp or disorderly moves.
The US NHAB Housing Market Index is expected to ease modestly to 65 from 67, despite a sharp rise in purchase cancellations, and a small drop in to 5.91 in the MBA 30-yr mortgage rate (as against 3.16% a year ago), both of which imply that risks are skewed to the downside of the consensus.
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ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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