MNI GLOBAL MORNING BRIEFING: Fed In Focus

All eyes will be on the Fed later Wednesday, as markets look for a 75bps hike and hints regarding the size September hike. This morning’s focus will be Eurozone consumer confidence surveys, which are all seeing outlooks plunge further.

MNI China Liquidity Survey (0700 BST)

The June China Liquidity Index highlighted liquidity conditions across China’s interbank markets tightening, signalling a pick-up in credit demand into the half-year end. Today’s July report will give insight into further tightening as lock-down measures ease.

Germany GFK Consumer Sentiment (0700 BST)

Looking forward to August, a further 1.5-point slide to a fresh record low of -28.9 points is pencilled in for German consumer confidence. This would again be substantially worse than the onset of Covid-19 saw a May 2020 low of -23.1. Inflationary pressures and economic outlooks have consumers geared for a looming recession and the propensity to buy plunging.

France Consumer Sentiment (0745 BST)

Also expected to take another hit is French consumer confidence, projected to edge down a further 2 points to 80 in July. This would be the seventh consecutive month of decline and the lowest reading since Spring 2013. Despite anticipated inflation outlooks easing slightly in June, the unemployment subcategory could be concerning following last month’s uptick in pessimistic expectations.

Italy Business/Consumer Sentiment (0900 BST)

Consensus is seeing a decline in Italian consumer confidence by a further 1.7 points to 96.6 and manufacturing by 2 points to 108.0 in July. Whilst accelerating costs of living continue to weigh on consumers, the shift in manufacturing sentiment is less certain following the unexpected June uptick as production and order book expectations saw a surprise improvement.

US FOMC Rate Decision (1900 BST)

With firm consensus for a 75bp Fed hike, the focus at the July meeting will be on Powell and the Statement. The key immediate question is the FOMC’s thinking on the magnitude of the next hike. A reduction in the size of hikes is likely starting in September, especially given weakening economic data and the ongoing moderation in inflation expectations.

See our in-depth preview here.

Prior to the FOMC decision, durable goods orders will be due at 1330 BST. Markets will be watching this prelim June print for signs of contraction, which would confirm waning demand underlining recessionary fears.

Date	GMT/Local	Impact	Flag	Country	Event
27/07/2022	0600/0800	*		DE	GFK Consumer Climate
27/07/2022	0600/1400	**		CN	MNI China Liquidity Survey
27/07/2022	0645/0845	**		FR	Consumer Sentiment
27/07/2022	0800/1000	**		IT	ISTAT Business Confidence
27/07/2022	0800/1000	**		IT	ISTAT Consumer Confidence
27/07/2022	0800/1000	**		EU	M3
27/07/2022	0900/1000	*		UK	Index Linked Gilt Outright Auction Result
27/07/2022	1100/0700	**		US	MBA Weekly Applications Index
27/07/2022	1230/0830	**		US	durable goods new orders
27/07/2022	1230/0830	**		US	Advance Trade, Advance Business Inventories
27/07/2022	1400/1000	**		US	NAR pending home sales
27/07/2022	1430/1030	**		US	DOE weekly crude oil stocks
27/07/2022	1530/1130	**		US	US Treasury Auction Result for 2 Year Floating Rate Note
27/07/2022	1800/1400	***		US	FOMC Statement