Macroeconomics: The Week Ahead: 20-24 July 2026

The Week Ahead – Preview:

The US and Iran are once again in open conflict, even if mutual attacks are still relatively limited and targeted, with the risk of further escalation all too real, and the mutual bombardment of infrastructure (energy, port, rail, road and shipping) civilian targets in Russia and Ukraine continues.

While oil prices have risen significantly, it is the sharp rebound in refined products and European Gas prices (spot and out into 2027) that will be most insidious for inflation risks, above all given inventories in crude and petroleum products remain very low, along with rising grains prices due to Black Sea disruptions and a very rapid deterioration in France’s Maize crop.

The new week’s schedule has an expected hawkish no change ECB rate decision, G7 flash PMIs and other surveys, UK, Japan and Canada CPI, UK and Australian labour data, and little of significance from the US, while the US and worldwide run of Q2 earnings picks up pace with Alphabet and Intel among the highlights.

UK markets will be focused on the unveiling of PM Burnham’s cabinet, and details on what policy areas will top its agenda, and how that looks in terms of fiscal policy risks. Burnham has done well to keep a lid on leaks about the formation of his cabinet and policy agenda, in contrast to the Starmer regime, but the litmus test will be about execution, above all maintaining discipline and a semblance of party unity on policy implementation, which was woeful under Starmer. Given the array of challenges and deep divisions within the Labour Party, Burnham’s honeymoon is likely to be brief.

It is also a busy week for EM central bank decision is expected to see rates cut 25 bps in Hungary and Russia, raised 25 bps in South Africa, and left unchanged in Ghana, Indonesia (though the decision is finely balanced, with some expecting another rate hike), Nigeria, Sri Lanka and Turkey.

In the commodity space outside of the obvious energy focus, there are earnings and production reports in the Metals/Mining, the USDA’s monthly livestock reports along with its de nouveau Global Coffee and Dairy reports, and New Zealand’s Global Dairy Trade auction. The other overarching theme will be AI spending and investment, brought more sharply into focus after China’s Moonshot unveiled its Kimi K3 model last Friday and Alibaba its Qwen3.8 Max on Sunday, sending a DeepSeek-like shock into an already unsettled trading environment for chip and other AI-related stocks.

While renewed concerns about rising rates and a degree of inevitability about some rotation trades out of overvalued sectors as investors take some risk off the table during the summer holiday period have definitely played a role, along with a high level of leverage, the jury remains out on whether this is a correction or it signals a more profound shift in sentiment.

** Flash PMIs: It is debatable whether this week’s PMIs will be of value in medium-term growth signal terms, given a very uncertain picture on how the current escalation in the Persian Gulf, and supply chain threats in the Black Sea will pan out, though they are likely to capture some reaction to the recent rebound in energy prices. Consensus estimates look for modest/marginal improvements in headline readings, whereby Eurozone and UK readings for manufacturing point to limited expansion, while services remain mostly in slight contraction, while US Manufacturing is expected to build on current strength, while Services expand modestly. Much the same can be said of the UK quarterly CBI Business Optimism survey, the outcome of which will depend heavily on data collection timing effects.

** U.K.: With CPI, labour data, Retail Sales and PSNB on tap, it is a very busy week for major UK data, but barring sharp outliers relative to forecasts, these may prove to be little more than statistical roadkill due to the focus on politics. Be that as it may, Tuesday’s labour report is forecast to show Payrolls slipping a fractional -6K but extending a long trend of little or negative job growth stretching back to end 2024 (see chart). Core Average Weekly Earnings are seen steady at 3.4%, along with core Private Sector earnings at 2.9%, while the Unemployment Rate is expected to hold at 4.9%. Overall, it points to a weak labour market that will have the MPC majority erring on the side of caution about hiking rates in response to elevated inflation. CPI is seen posting a modest rise of 0.1% m/m, easing the y/y rate 0.1 ppt to 2.7%, with a fall in road fuel prices and airfares the primary restraint, while Services CPI is expected to ease 0.2 ppt to 3.5% y/y, but this will be reversed in July as household energy will rise quite sharply. After a choppy two months (April -1.0% m/m and May +1.2% m/m), headline Retail Sales are expected to fall -0.1% m/m, but fall a sharper -0.4% m/m ex-Auto fuel, per continuing to signal a very patchy picture on consumer spending.

** Eurozone: The easing in June CPI is expected to have been sufficient for the ECB to hold rates at this week’s meeting, along with the Q3 ECB Bank Lending survey that is likely to show a modest tightening in financing for a 9th consecutive quarter. But with energy prices rebounding sharply and Lagarde sounding a still hawkish bias on rates even when energy prices had retreated, the messaging will remain hawkish, emphasizing upside risks to inflation, while also noting that labour demand remains weak and considerable risks to the growth outlook.

Elsewhere: Canadian CPI on Monday is forecast to see a drop of -0.2% m/m due to energy (gasoline) prices, in part offset by food and recreational goods prices, which would see the y/y rate drop to 2.9% from 3.2%, while core CPI measures are forecast to remain at or below the BoC’s 2.0% target: core 1.7%, Trimmed Mean 2.0% and Weighted Median 2.1%, offering post hoc support for the BoC’s decision to hold rates steady. By contrast, New Zealand’s Q2 CPI is expected to surge 1.4% q/q headline to drive the y/y rate up to 4.0% from 3.1%, with Tradeable CPI seen jumping 2.5% q/q and Non-tradeable to rise 0.6% q/q, again supporting the RBNZ’s 25 bps rate hike decision and hawkish bias.  South Korea’s Q2 GDP is seen slowing sharply from Q1’s breakneck 1.8% q/q to 0.5%, as the combination of higher energy prices constraining consumer spending and capacity and supply constraints in the chip sector weigh, with real net exports providing much less support.

There are 83 S&P 500 companies reporting this week, with worldwide corporate earnings highlights as compiled by Bloomberg News likely to include: 3M, Adani Green Energy, Adani Power, Alphabet, America Movil, American Express, Ameriprise Financial, Argenx, AT&T, AvalonBay Communities, Axis Bank, Bajaj Auto, Banco Santander, Blackstone, BNP Paribas, Canadian National Railway, Capital One Financial, Charles Schwab, Chocoladefabriken Lindt & Spruengli, Chubb, Chugai Pharmaceutical, Cipla, CME Group, Comcast, Crown Castle, CSX, Danaher, Dassault Aviation, Dassault Systemes, Delta Electronics Thailand, Deutsche Boerse, Digital Realty Trust, Disco, Dover, DR Horton, DSV, EQT, Equinor, Equity Residential, Freeport-McMoRan, Galderma Group, GE Vernova, General Motors, Givaudan, Grupo Financiero Banorte, Halliburton, Hangzhou Hikvision Digital Technology, Hartford Insurance, HDFC Bank, Honeywell International, Huntington Bancshares, Hyundai Mobis, Iberdrola, IBM, ICICI Bank, Infosys, Intel, Interactive Brokers, KB Financial, KeyCorp, Kone, Kotak Mahindra Bank, Kuehne + Nagel International, Lockheed Martin, Lonza, Marsh & McLennan, Moody’s, MSCI, Nasdaq, Naturgy Energy Group, Neste, Nestle, Nestle India, Newmont, NextEra Energy, Nokia, Norfolk Southern, Northern Trust, Northrop Grumman, Novartis, Otis Worldwide, PG&E, Philip Morris International, Poste Italiane, Raymond James Financial, Relx, Repsol, Roche, Roper Technologies, RTX, Ryanair, Samsung Biologics, SAP, Schindler, ServiceNow, Shin-Etsu Chemical, Shinhan Financial Group, SLB, Steel Dynamics, STMicroelectronics, Suntec Real Estate Investment Trust, T-Mobile US, TE Connectivity, Tesla, Texas Instruments, Thales, Thermo Fisher Scientific, TotalEnergies, UltraTech Cement, UniCredit, Union Pacific, United Rentals, VAT Group, Verizon Communications, Volkswagen, W. R. Berkley, Wal-Mart de Mexico, Waste Connections, WEG, Westinghouse Air Brake Technologies.