ING: Data Points To 75bp July Hike, Not 100bp

ING writes that "we have had quite an array of US numbers this morning, which fit with the notion that a 75bp hike is the most likely outcome of the July 27th FOMC meeting."

• The inflation indicators were encouraging from a dovish perspective, with ING pointing out both the soft import price figures ("more evidence that dollar strength is acting as a brake on inflation by reducing some pipeline price pressures") and the UMichigan inflation expectation downside surprise ("they suggest households are looking through the current period of inflation and have confidence that it will head lower with lower gasoline prices the likely instigator").
• And while retail sales was stronger than expected, industrial production was "disappointing".
• Ultimately, "while all options were on the table, [Fed's Bullard and Waller] indicated they wanted to see strong numbers between now and July 27th to convince them that 75bp wasn’t the better option at this stage. Today’s numbers on balance don’t appear to be strong enough to make that case and if they can’t be convinced then it is unlikely that many others on the FOMC will be. Housing data is on the schedule for next week, but rising mortgage rates and falling mortgage applications suggest the numbers won’t be strong enough to alter the story."