Macroeconomics: The Week Ahead: 11 – 15 August 2025

A busy week for data and gets off to a quiet start statistically, with China’s weekend PPI and CPI, another down at heel UK KPMG/REC Employment survey and higher than expected Norwegian CPI to digest. However, the overarching themes of trade and geopolitical tensions continue to cast a very long shadow, as does speculation around the Fed rate outlook and its governance. We have maintained the view for much of the year that Fed rate cuts would be heavily back loaded in timing terms, likely seeing 3 rate cuts in the final four months of the year, a view reinforced by the steep downward revisions to Payrolls, regardless of the mounting political pressures, or the temporary nomination of arch Fed critic Miran to replaces Alice Kugler on the FOMC. This week’s CPI and the August Payrolls data will obviously be very significant in determining the rate trajectory.

The Week Ahead Preview:

It will be a bumper week for major data from the US, UK, China and Japan, as well as monthly oil and agricultural commodity reports, as the overarching political and trade themes continue to cast a long shadow. The US looks to CPI, PPI, Retail Sales, Industrial Production and Michigan Sentiment. The UK has labour data, provisional Q2 GDP, monthly activity indicators and BRC Retail Sales, while China looks to credit aggregates, monthly activity and property statistics. Japan also has provisional Q2 GDP, PPI and services output. India awaits CPI, WPI and Trade, Australia will focus on Q2 Wage Price Index and monthly labour report, while the Eurozone looks to Germany’s ZEW survey, detailed and revised Q2 GDP, and final HICP readings. On the central bank front, there are a number of Fed speakers, with Australia’s RBA seen cutting rates a further 25 bps on the back of slowing inflation and an increasingly sluggish labour markets, with rates seen on hold in Norway (4.25%) and Peru (3.50%), but cutt a further 25 bps to 1.50% in Thailand. In the commodities space, the EIA, IEA and OPEC issue monthly oil market reports, while agricultural markets looks to USDA WASDE, China Agricultural Ministry CASDE, Brazil’s Unica Sugar and Conab S&D reports for Corn & Soybeans. Outside of the US/Russia summit, all eyes will be on whether (as has been mooted) there will be an extension of the US/China trade truce, and what, if any, announcements on tech sector restrictions and other non-tariff barriers may be announced. The inconsistent US administration approach to imports of Russian energy by China and India will likely remain notable.

USA: Headline CPI is expected to be modestly restrained by gasoline prices, posting a 0.2% m/m rise to edge the y/y rate up to 2.8%, while elevated services pressures (last 3.8% y/y) and some pass through of tariffs are forecast to show core rising 0.3% m/m to 3.0% y/y. PPI is seen up 0.2% m/m on headline and core, with base effects pushing up y/y rates by 0.2 and 0.3 ppt to 2.5% and 2.9% respectively. A bumper month for Auto Sales is expected to see headline Retail Sales up 0.5% m/m (risks firmly skewed to the upside), with the ex-Autos measure seen up 0.3% m/m and core ‘Control Group’ easing modestly to 0.4% m/m from June’s 0.5%, assisted by online promotions; revisions will as ever require attention. Industrial Production and Manufacturing Output are forecast to be flat m/m, with the ISM survey’s headline fall masking better readings for production and supply. Given greater Fed emphasis on labour market trends, weekly jobless claims will require attention above all, continued claims that hit a post Covid high of 1.974 Mln last week. Last but not least provisional Michigan Sentiment is expected to edge up to 62.0 from 61.7, with labour demand concerns seen offsetting the impact of a robust equity market.

China: Credit aggregates are likely to show a sharp slowdown in New Yuan Loans to just CNY 300 Bln (vs. prior CNY 2.2 Trln), which will in part be seasonal, but also underline weak demand for credit, while continued strength in government borrowing (to support the economy) is likely to see Aggregate Financing up CNY 1.818 Trln according to the median estimate. Monthly indicators are expected to echo sluggish PMIs, as well as the impact of both unseasonably hot weather and major storms in some regions, with Retail Sales seen slowing to 4.6% from 4.8% y/y, Industrial Production to drop to 6.0% from 6.8%, and Fixed Asset Investment to ease again to 2.7% y.t.d. from 2.8%. Unsurprisingly, the property sector is likely to remain a major drag with Property Investment seen falling –11.4% y/y, and Property Sales to continue falling (last -5.4% y/y).

U.K.: This week’s run of data will likely only serve to re-emphasise concerns about UK public sector finances, as well as the divisions on the MPC evident in last week’s voting, which in truth are hardly new. The latter is in the sense that the MPC has always had a single mandate, i.e. inflation, but even in the era of Lord King, it was always argued that achieving the inflation target must also take into account growth and labour market considerations. One might add that whether the issue is fiscal or monetary, the primary problem is that the UK’s challenges are structural rather than cyclical, and per se, require innovative thinking and strong institutional leadership, both of which are sadly notable by their absence. Be that as it may Tuesday’s labour data are forecast to show a -20K drop in HMRC Payrolls and a likely further modest up tick in the Claimant Count, while headline Average Weekly Earnings are seen dropping quite sharply to 4.7% from 4.0%, though remaining unchanged ex-Bonus at a lofty 5.0%, and slightly on Private Sector 4.8%; other anecdotal survey evidence points to wage growth being much lower, and labour demand rather weaker. Thursday’s provisional Q2 GDP is expected to slow to 0.1% q/q, with a modest 0.2% expansion in June monthly GDP, paced by a 0.2% m/m rise in the Index of Services, and a modest 0.2% m/m upturn in Industrial Production and a 0.5% m/m rebound in Construction Output putting a break on the reactive correction to Q1’s tariff related front loaded strength. In detail of Q2 GDP, Private Consumption is expected to slow to 0.2% q/q from 0.4%, Government Spending to bounce 0.8% q/q from a -0.4% in Q1, Net Exports to drag slightly, and perhaps surprisingly Business Investment to expand slightly at 0.3% q/q after surging 3.9% in Q1. The labour data (despite being flawed) will probably weigh more heavily in the MPC policy debate.

Japan: Q2 GDP is expected to remain tepid, with a 0.4% SAAR rebound after contracting -0.2% in Q1. In the detail Business CapEx is anticipated to remain solid at 0.7% q/q, though slowing from Q1 1.1%, with Personal Consumption remaining sluggish at an unchanged 0.1% q/q, with the primary boost coming from a 0.1% contribution from Net Exports that deducted 0.8 ppt in Q1, though heavily offset by a -0.3 ppt deduction from Inventories, which added 0.6 ppt in Q1.

As for US earnings, big tech has been a big contributor (Meta results flattered by some accounting manoeuvres on expensing investments), elsewhere the picture has been very uneven. But what has been striking is that we seem to have conveniently forgotten just how far down earnings and revenue estimates were revised down at the start of Q2 in response to ‘Liberation Day’, i.e. a very low bar was set for Q2 earnings ‘beats’. Some are pointing to 6.0% ex-big tech earnings growth as being good, but seem to ignore that we are on a forward EPS of ca. 22.0, which for my way of thinking, means earnings growth should be north of 10%. Also note the two tables attached – while revenue revision momentum remains solid, EPS is fading badly. Then look at the 2025 Forward PE Ratio history table by sector, and think on whether one would really be wanting to making much in the way of allocations to equities on those sort of multiples. Further equity gains are really going be heavily reliant on Fed rate cut hopes… and then again, one has to ask, ‘are those hopes already in the price’? One should also add that the US tariff regime is going to be expensive for the government to supervise and companies to implement, it is so complex and above all very fluid (ambiguous). Just as importantly, while the Big Beautiful Bill will see significant stimulus in H1 2025, the tariff regime as it stands implies a significant fiscal tightening in H2 2025, with negative implications for both earnings and growth. One might also add that Investment Grade and High Yield credit spreads are very tight, despite a continued rise in defaults and delinquencies, even if quite a lot of that rise is related to Private Equity related debt.

There are just 6 S&P 500 companies reporting this week, with worldwide corporate earnings highlights as compiled by Bloomberg News likely to include: Adyen, Antofagasta, Applied Materials, Aviva, Banco BTG Pactual, Bank Leumi Le-Israel BM, Barrick Mining, Cardinal Health, China Unicom Hong Kong, Circle Internet, Commonwealth Bank of Australia, CoreWeave, Deere & Co, E.On, East Money Information, Foxconn Industrial Internet, Franco-Nevada, Hannover Re, Hapag-Lloyd, Hon Hai Precision Industry, JD.com, Kweichow Moutai, NetEase, PKO Bank Polski, PTT, RWE, Sea, Sompo Holdings, Swiss Re, Talanx, Telstra Group, Tencent, Tencent Music Entertainment, Venture Global, Wanhua Chemical.