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Week Ahead

UK
  • Last week’s MPC meeting, 50bp rate hike and release of the MPR saw a number of analysts increase their expectations for the near-term hiking profile. However, markets were already pricing in so much, and the medium-term growth outlook was seen to have deteriorated to such an extent, that we saw markets price out hikes, particularly towards the end of this year and into next. Some of this move was reversed following a stronger than expected US employment report on Friday. Markets now price 47bp for the September meeting (with the word “forceful” remaining in the MPC’s guidance), 86bp (cumulatively) for November, 117bp by December and 135bp by February.
  • The week ahead sees no scheduled MPC appearances with the main domestic event on Friday – the release of UK monthly activity data for June, including the first print of Q2 GDP. At the press conference, the Bank were quick to talk down the significance of the better-than-expected May data given the change in holiday schedules. For June monthly GDP, the consensus of economists is at -1.2% M/M, but there is a wide spread of forecasts with most between -1.6%M/M and -0.7%M/M.
  • The beginning of the week sees little else of significance on the data calendar globally, with the first big external event of the week the release of US CPI on Wednesday.

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