Macroeconomic & Geopolitical

Farewell, Forward Guidance

July 2022 – 3 min read

The ECB frontloaded tightening through a 50bps hike and bid farewell to forward guidance. Meanwhile, strong U.S. data supports further hikes from the Fed. Watch for the July FOMC meeting and U.S. and euro area Q2 GDP next week.

Watchlist

farewell-forward-guidance-chart1.jpgArrows indicate consensus forecast compared to the previous period. Local dates of release.

U.S.
  • The July FOMC meeting is expected to deliver another rate increase of 75bps.
  • We will watch Q2 GDP, particularly as there are prominent risks of a second-quarter contraction. However, this likely won’t stop the Fed, as the Q1 decline was largely related to weaker trade and inflation remains too high.
Europe
  • We are monitoring the Ukraine-Russia conflict and Russia’s gas flows to Europe. The risk of a severe cut-off in energy deliveries persists.
  • Euro area (EA) Flash July CPI is expected to reach a new record high.
  • EA Q2 GDP will signal how increasing uncertainty and rising prices are impacting the region.
Asia Pacific
  • June activity data for Japan is expected to show a modest rebound in consumption as the economy reopened further, as well as a resurgence of tourism.
  • China’s industrial profits will likely continue to face constraints from the zero-COVID policy and elevated producer price inflation.

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