What to watch

It's a very busy day, and we have already received UK activity data for May, Swedish inflation expectation data and final inflation prints around the Eurozone. There are three key events to watch out for:

• The main event of the day will be US CPI at 13:30BST / 14:30CET. Consensus has headline CPI inflation rising +1.1% M/M in June after an equally rampant +1.0% M/M as energy accelerated even further on a large rise in gasoline as well electricity price increases. Core inflation is seen dipping to a ‘large’ +0.5% M/M (av. 0.54% M/M) after surprisingly accelerating from 0.57% to 0.63% in May for the strongest since Jun’21. The report comes with a 75bp hike on Jul 27 seen as locked in and would likely require a very large surprise to change this. However, as in the approach to last week’s strong payrolls, large market moves have opened sizeable two-sided risk to expectations for both the Sep FOMC and meetings further out. For the full MNI US CPI preview see here.
• We also have the Bank of Canada monetary policy announcement at 15:00BST / 16:00CET where a 75bp hike is widely expected, but some analysts are not ruling out 100bp hikes. With so much priced into expectations, the BoC will have to be particularly hawkish to satisfy markets. For the full MNI BoC preview see here.
• The final big event of the day will be the results of the first round of the Conservative leadership contest. There are eight remaining candidates and votes from 30 MPs will be required to progress to the next round (all the candidates needed support from 20 MPs to receive the nomination in the first place). If all the candidates receive at least 30 votes, the candidate with the lowest number of votes will be eliminated. Voting is expected to being around 13:30BST / 14:30CET with result around 17:00BST / 18:00CET.