MNI US OPEN - US Inflation Expected to Show Modest Progress
EXECUTIVE SUMMARY:
- MNI US CPI PREVIEW: MORE “MODEST” PROGRESS WITHIN WIDER TAILS
- FED GOV COOK SEES SOFT LANDING FOR US ECONOMY
- BIDEN WELCOMES CLOSER UK-EUROPE TIES IN FIRST STARMER MEETING
- UK GDP BOOST IN MAY, 3-MONTH GROWTH AT 2-YEAR HIGH
MNI (LONDON) - Figure 1: Recent US labour market developments
![](https://media.marketnews.com/image_1dd22df193.png)
NEWS
MNI US CPI PREVIEW: More “Modest” Progress Within Wider Tails
Consensus sees core CPI at 0.2% M/M in June after the softer than expected 0.16% M/M in May (vs cons 0.3), with a mild skew toward a “high” 0.2%, per MNI’s compilation of sell-side previews. But there is an unusually wide range of estimates for core this month. Uncertainty over some categories (eg auto insurance) means that a surprise reading in either direction should be interpreted with caution. That may prove especially true for the “supercore’ reading, which is expected to bounce from May’s slightly negative M/M print, to 0.27% (MNI sell-side average), but with a wide range of estimates.
US (MNI): Fed Gov Cook Sees Soft Landing for US Economy
Federal Reserve Governor Lisa Cook said Wednesday the U.S. economy is likely headed for a rare soft landing due partly to the unusual circumstances of the pandemic. Much of the inflation over the past four years was due to shortages that have since been resolved, and even after tight labor markets took over as the main driver of inflation, there are signs that too is easing, she said.
"In the U.S., what I have seen so far appears to be consistent with a soft landing: Inflation has fallen significantly from its peak, and the labor market has gradually cooled but remains strong," she in remarks prepared for the Australian Conference of Economists in Adelaide, Australia.
US/HUNGARY (BBG): Hungary’s Orban Will Visit Trump in Florida After NATO Summit
Former President Donald Trump will meet with Hungarian Prime Minister Viktor Orban in Florida on Thursday, according to people familiar with the matter, less than a week after he met with Russian President Vladimir Putin in Moscow. The visit is likely to fan concerns that the Hungarian leader is working as an intermediary between Putin and Trump. Trump and Putin professed a fondness for one another during the US president’s first term - often garnering bipartisan criticism. More recently, the Republican leader has said he believed he could convince Putin to end his war in Ukraine and release Americans detained in Russia if he were elected to a second term.
UK/US (BBG): Biden Welcomes Closer UK-Europe Ties in First Starmer Meeting
President Joe Biden called the UK the “knot” that ties the NATO alliance together as he praised new Prime Minister Keir Starmer’s efforts to forge closer ties with Europe. It was the first meeting of the two leaders since the Labour Party won the British election less than a week ago. “I kind of see you guys as the knot tying the transatlantic alliance together, the closer you are with Europe,” Biden said, speaking in the Oval Office on Wednesday night. “I think that’s absolutely right,” Starmer replied.
UK (BBG): UK Overhauls Listing Rules in Bid to Lure IPOs to London
UK regulators overhauled their rules for companies looking to make their public debut in London, part of a concerted effort to draw more initial public offerings to the City. The new rules allow companies to carry out more activities without putting them to a shareholder vote, the UK’s Financial Conduct Authority said Thursday. They also make it easier for companies to have two classes of shares, a structure that’s often favored by entrepreneurs or early-stage investors who want to have a significant role in businesses even after they have gone public.
UK/RUSSIA (Telegraph): Keir Starmer Approves Use of British Storm Shadow Missiles Inside Russia
British Storm Shadow missiles can be fired by Ukraine into Russia, Sir Keir Starmer has signalled in a major shift of policy likely to anger Moscow. Volodymyr Zelensky thanked the Prime Minister at a Nato summit in Washington for lifting a ban on Ukraine hitting targets across the border with one of the most effective Western weapons donated since the war. Mr Zelensky said: “This morning, I learned about the permission to use Storm Shadow missiles against military targets in Russian territory. Today, we had the opportunity to discuss the practical implementation of this decision.”
FRANCE (MNI): Senate Pres. Backs ENS-LR Co-op But No Coalition & No Gov't 'Til Sep
President of the Senate Gérard Larcher, hailing from the conservative Les Republicains (LR), has stated this morning that he supports an "independent line" for the party but that LR should form a "legislative pact" with the centrist Ensemble bloc supportive of President Emmanuel Macron in order to pass some legislation. This stance of cooperation but no coalition appears to match language from new parliamentary leader of LR (or as they will be known in the National Assembly, the Republican Right) Laurent Wauquiez.
FRANCE (BBG): Bank of France Chief Warns Next Government Not to Widen Deficit
France cannot afford to keep increasing its deficit or burden its companies with more taxes and costs, Bank of France Governor François Villeroy de Galhau warned as political parties jostle to form the country’s next government. Snap legislative elections have returned a hung parliament with no group in a position to have enough lawmakers to pass economic policy, leading to uncertainty for businesses. President Emmanuel Macron has called for a broad majority to emerge from the political center and has said he’ll leave more time for talks before naming a new prime minister.
ECB (MNI): Spanish Government Propose Former ECB Staffer as Next BoS Head
El Pais report that the Spanish government have proposed putting forward Jos Luis Escriv, former head of the Monetary Policy Division at the ECB in the late '90s / early '00s as the next head of the Bank of Spain - and therefore the Spain representative at the ECB. Escriv currently serves as minister for Digital Transformation as part of Sanchez's Spanish government. The Spanish economy minister added this morning that deputy CB governor Delgado may represent Spain at the ECB's next meeting on July 18th should a governor not yet be appointed.
BOK (MNI): Bank of Korea Keeps Policy Rate at 3.50%
Bank of Korea Governor Rhee Chang-yong on Thursday said more evidence of slowing inflation was needed before cutting rates, and that it was necessary to consider the effect of an easing cycle on household borrowing and the won. “It is still difficult to predict when we will start rate cuts. Since the uncertainties regarding the future path of inflation have not been completely resolved, we need to see further whether the slowing trend of inflation will continue,” he said after the BOK unanimously decided to keep its policy rate unchanged at 3.50% for a twelfth consecutive meeting.
BITCOIN (BBG): Trump to Address Bitcoin Event in Show of Support for Crypto
Donald Trump will speak at a Bitcoin conference this month, according to the event’s organizers, an address that would highlight his growing embrace of the cryptocurrency industry. The presumptive Republican presidential nominee is due to deliver his speech on July 27 on the main stage of the Bitcoin 2024 event in Nashville, Tennessee, organizer BTC Media LLC said in a statement late Wednesday. Brandon Green, chief of staff and head of events at BTC Media, said he can’t comment on what Trump is going to talk about.
CORPORATE (BBG): Apple Avoids EU Antitrust Threat With Tap-and-Pay Probe Deal
Apple Inc. has avoided the threat of fines from European Union regulators by agreeing to open up its mobile wallet technology to other providers free of charge for a decade. The settlement brings to an end an investigation into the US tech giant’s closely guarded payments technology. The EU earlier warned that restricting access to the technology amounted to an abuse of its market power. “Apple has committed to allow rivals to access the ‘tap and go’ technology of iPhones,” the EU’s competition chief Margrethe Vestager said. The decision will prevent Apple “from excluding other mobile wallets from the iPhone’s ecosystem.”
DATA
UK DATA (MNI): UK GDP Boost in May, 3-Month Growth at 2-Year High
- UK MAY GDP +0.4% M/M, +0.9% 3MM, +1% 3M Y/Y
- UK MAY IND PROD +0.2% M/M, +0.4% Y/Y
- UK MAY MANUF OUTPUT +0.4% M/M, +0.6% Y/Y
- UK MAY SERVICES INDEX +0.3% M/M, +1.1% 3MM
- UK MAY TRADE BALANCE GBP -4.89BN
The UK economy grew by 0.4% in May 2024, picking up from a month of no growth in April, the latest data from the Office for National Statistics showed Thursday. GDP is estimated to have grown by 0.9% in the three months to May 2024 compared with the three months to February 2024, the ONS said, driven by a growth of 1.1% in services output. The data was largely inline with Bank of England expectations and is unlikely to shift the needle in upcoming policy discussions.
We don't think this really impacts the MPC's August decision on whether rates will be cut - next week's CPI and labour market data remain much more important there and GBPUSD's 10 pip increase on the release shows markets aren't placing huge emphasis on this data either. However, if we continue to get upside surprises to activity data the 100bp of cuts priced in up to August 2025 might start to look like too many.
GERMANY DATA (MNI): CPI Details Show Disinflation Tapering Off for High-Rate Items
- GERMANY JUNE FINAL HICP +2.5 % M/M, +0.2% Y/Y
- GERMAN JUN CPI +2.2 % Y/Y
German final June HICP was unrevised from the flash readings at +2.5% Y/Y(+2.8% May) and +0.2% M/M (+0.2% May). The final reading of CPI was also unrevised at +2.2% Y/Y (+2.4% May) and +0.1% M/M (+0.1% May). Core CPI printed at +2.9% Y/Y (+3.0% May), the lowest since February 2022. Overall, the data confirms the main conclusions from the flash reading - services remain sticky and momentum in the next months will be subject to uncertainty. The final major CPI components were unchanged from the flash estimates: goods prices printed at +0.8% Y/Y (+1.0% May), services unchanged at 3.9% (+3.9% May).
AUSTRALIA DATA (MNI): CBA Spending Insights Show Another Solid Month for Retail
CBA household spending insights (HSI) for June rose 0.6% m/m and 3.9% y/y after 0.7% and 4.0% in May, in line with the inflation rate. The strength in June was driven by recreation and hospitality, both discretionary items. The series has a high correlation with the ABS' retail sales series and in addition HSI retail spending was solid again in June in line with May. * CBA observes that home ownership status is significantly impacting spending trends with renters down 0.9% y/y but mortgage holders up 1.5% y/y and owners +2.1% y/y. * The per capita HSI rose 2.6% y/y, which would be negative in real terms. * Goods expenditure fell 1% m/m in June after rising 1.4% to be up 3% y/y.
NEW ZEALAND (MNI): Food Prices Higher But Aggregate Close to Flat in June
June prices for around 45% of the NZ CPI basket were released today and while many of the series are volatile, such as food and fuel, as an aggregate they were close to flat on the month. Q2 CPI prints on July 17 and will be watched closely. * Headline food prices rose 1% m/m to be down 0.3% y/y after +0.2% y/y, the lowest since July 2016 but the annual decline is driven by base effects from the volatile fresh fruit & vegetables component which was boosted last year by storms, as without them food prices rose 2.3% y/y.
FOREX: Greenback on Backfoot in Pre-CPI Trade
- The dollar remains on the backfoot headed into NY hours - despite very light newsflow and very little data of note. Moves in the greenback are relatively contained against the rest of G10 FX, however EUR/USD is now approaching more interesting levels. The Monday high has now been topped, and 1.0852 is unlikely to provide any significant resistance ahead of 1.0857, the 76.4% retracement for the downleg off the June high.
- Any USD-negative outcome from today's CPI will turn focus to 1.0961 - the prevailing high just before Macron's snap election call that undermined the EUR and French bond markets at the beginning of June. Similarly for GBP, 1.2894 is the level to watch - marking the mid-March high. Strength through here would be the best levels of 2024.
- NOK remains an underperformer, leading losses in G10 and helping EUR/NOK rally well above the 11.60 mark - trading the best levels since mid-May in the process. While oil prices are generally flat, this week's softer-than-expected CPI print is still weighing on local markets - seen counteracting the bank's recent hawkish shift in communications.
- Focus for the duration of the Thursday session turns to US CPI data for June. Markets expect topline Y/Y to slow to 3.1% from 3.3%, however core inflation is expected to hold at 3.4% this month. Central bank speakers today include Fed's Bostic and Musalem.
EGBS: Bund Futures Hold Tight Range Ahead of US CPI
Bund futures are -2 at 131.28, having traded in a tight 24 tick range this morning on slightly below-average volumes. Futures have held yesterday’s move away from 131.55, the July high and the 50-day EMA.
- This morning’s data (stronger-than-expected UK GDP, in-line German final HICP) had little net impact on EGBs, alongside non-controversial comments from ECB’s Villeroy.
- Morning focus was on 3/7/20-year BTP supply, which will have weighed in the run-up to the 1000BST bidding deadline.
- The results were reasonably solid across the lines on offer, helping BTP futures to new intraday highs (albeit only to 117.25, +17 ticks today).
- The positive European equity performance today has also aided broader peripheral spread tightening.
- Broader macro focus remains on this afternoon’s US CPI release.
GILTS: Off Lows, Tight Ranges
Gilts off lows. Firmer-than-expected UK GDP provided early pressure, before solid demand at the GBP3.75bn 4.00% Oct-31 gilt auction provided light support.
- Futures stick to a tight 17-tick range, last -4 at 97.93.
- Our technical analyst points to a short-term bearish picture despite the recent gains in the contract. Initial support at the July 4 low (97.32).
- Yields 0.5-1.5bp higher.
- While we don’t see today's GDP release as a meaningful market mover, we have noted overall activity data is holding up much better than consensus/BoE exp.
- SONIA futures a little lower as result, -1.0 to -2.5.
- Meanwhile BoE dated OIS now shows ~11.5bp of cuts for August vs. ~12.5bp late yesterday. ~45.5bp of easing priced through year end.
- The UK calendar is empty for the rest of the day, leaving focus on U.S. CPI.
- Further out, June’s CPI data is the next meaningful UK release, due Wednesday.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
Aug-24 | 5.087 | -11.3 |
Sep-24 | 4.996 | -20.4 |
Nov-24 | 4.837 | -36.3 |
Dec-24 | 4.748 | -45.2 |
Feb-25 | 4.608 | -59.2 |
Mar-25 | 4.516 | -68.4 |
May-25 | 4.393 | -80.7 |
Jun-25 | 4.304 | -89.6 |
Source: MNI - Market News/Bloomberg. 2025 meeting dates are estimated.
EQUITIES: E-Mini S&P Trading Close to Wednesday's Fresh Cycle Highs
A bull cycle in Eurostoxx 50 futures is intact. Attention is on resistance at 5039.84, 61.8% of the May 16 - Jun 14 sell-off. It was pierced last week, a clear break of it would be a positive development and suggest scope for an extension of the bull cycle that started Jun 14. This would open 5082.32, the 76.4% retracement. A stronger reversal would instead expose 4846.00, the Apr 19 low and a key support. The trend condition in S&P E-Minis is bullish and the contract traded to fresh cycle high once again yesterday. The continuation higher confirms a resumption of the uptrend and maintains the bullish sequence of higher highs and higher lows. Moving average studies are in a clear bull-mode set-up too and this continues to highlight positive market sentiment. Sights are on the 5700.00 handle next. Support is at 5551.21, the 20-day EMA.
- Japan's NIKKEI closed higher by 392.03 pts or +0.94% at 42224.02 and the TOPIX ended 19.97 pts higher or +0.69% at 2929.17.
- Elsewhere, in China the SHANGHAI closed higher by 31.023 pts or +1.06% at 2970.387 and the HANG SENG ended 360.66 pts higher or +2.06% at 17832.33.
- Across Europe, Germany's DAX trades higher by 62.44 pts or +0.34% at 18471.22, FTSE 100 higher by 22.19 pts or +0.27% at 8215.58, CAC 40 up 51.83 pts or +0.68% at 7625.3 and Euro Stoxx 50 up 27.06 pts or +0.55% at 4986.24.
- Dow Jones mini down 32 pts or -0.08% at 40016, S&P 500 mini down 4 pts or -0.07% at 5683.75, NASDAQ mini down 18.75 pts or -0.09% at 20880.25.
Time: 09:55 BST
COMMODITIES: Gold Trades Near Intial Resistance, Undermining Bearish Theme
WTI futures have recovered from yesterday’s low and the recent bear leg appears to have been a correction. Recent cycle highs reinforced bullish conditions, signalling scope for a continuation higher near-term. Moving average studies are in a bull-mode set-up too, highlighting a rising trend. Sights are on $85.27, the Apr 12 high and a bull trigger. Initial firm support to watch is $79.80, the 50-day EMA. Gold remains constructive. Recent gains resulted in a print above resistance at $2387.8, the Jun 7 high. This undermines a recent bearish theme and a clear break would be viewed as a bullish development and open the key resistance at $2450.1, the May 20 high. Initial support to watch lies at the 50-day EMA, at 2329.5. A clear break of this average would instead confirm a resumption of the reversal from May 20 and expose $2277.4, May 3 low.
- WTI Crude up $0.27 or +0.33% at $82.37
- Natural Gas down $0.01 or -0.3% at $2.321
- Gold spot up $8.8 or +0.37% at $2381.11
- Copper down $1.4 or -0.3% at $459.4
- Silver up $0.15 or +0.47% at $30.9767
- Platinum down $10.84 or -1.09% at $984.66
Time: 09:55 BST
Date | GMT/Local | Impact | Country | Event |
11/07/2024 | 0900/1000 | ** | ![]() | Gilt Outright Auction Result |
11/07/2024 | - | *** | ![]() | Money Supply |
11/07/2024 | - | *** | ![]() | New Loans |
11/07/2024 | - | *** | ![]() | Social Financing |
11/07/2024 | 1230/0830 | *** | ![]() | Jobless Claims |
11/07/2024 | 1230/0830 | ** | ![]() | WASDE Weekly Import/Export |
11/07/2024 | 1230/0830 | *** | ![]() | CPI |
11/07/2024 | 1430/1030 | ** | ![]() | Natural Gas Stocks |
11/07/2024 | 1515/1115 | ![]() | Atlanta Fed's Raphael Bostic | |
11/07/2024 | 1530/1130 | ** | ![]() | US Bill 04 Week Treasury Auction Result |
11/07/2024 | 1530/1130 | * | ![]() | US Bill 08 Week Treasury Auction Result |
11/07/2024 | 1700/1300 | ![]() | St. Louis Fed's Alberto Musalem | |
11/07/2024 | 1700/1300 | *** | ![]() | US Treasury Auction Result for 30 Year Bond |
11/07/2024 | 1800/1400 | ** | ![]() | Treasury Budget |
12/07/2024 | 0430/1330 | ** | ![]() | Industrial Production |
12/07/2024 | 0600/0800 | *** | ![]() | Inflation Report |
12/07/2024 | 0645/0845 | *** | ![]() | HICP (f) |
12/07/2024 | 0700/0900 | *** | ![]() | HICP (f) |
12/07/2024 | - | *** | ![]() | Trade |
12/07/2024 | 1230/0830 | *** | ![]() | PPI |
12/07/2024 | 1230/0830 | * | ![]() | Building Permits |
12/07/2024 | 1300/0900 | * | ![]() | CREA Existing Home Sales |
12/07/2024 | 1400/1000 | ** | ![]() | U. Mich. Survey of Consumers |
12/07/2024 | 1600/1200 | *** | ![]() | USDA Crop Estimates - WASDE |
12/07/2024 | 1700/1300 | ** | ![]() | Baker Hughes Rig Count Overview - Weekly |