Coffee Break

Coffee Break:
  • Week

Last week in a nutshell

  • US initial jobless claims, a real time indicator of the US economy, have been deteriorating since the end of March. Pointing at a cyclical deterioration, the jobless claims have risen faster in typically manufacturing States of the South and Midwest parts of the US.
  • Business confidence indicators for the euro zone, in addition to flash PMIs, for June revealed readings just short of the low hit in April 2020 when COVID-19 hit Europe for the first time. Surging inflation amid the effects of the war in Ukraine and renewed supply chain issues are weighing on confidence for both businesses and consumers.
  • In his testimony before Congress, Federal Reserve Chair Jerome Powell confirmed the Fed’s commitment to bring inflation back down and stated that the strong American economy was well positioned to handle tighter monetary policy.
  • On the geopolitical front, EU countries confirmed their endorsement of Ukraine and Moldova as official candidates to join the bloc’s 27 members. Although largely symbolic, as the process is lengthy and tortuous, it is a geopolitical victory for Ukraine.

What’s next?

  • As Central banks are tightening into an economic slowdown any growth outlook-related data on supply and demand will be relevant. In the US, investors will scrutinize supply-related ISM, durable goods and inventory data, on the demand side, the Conference Board’s consumer confidence, as well as personal income and spending.
  • In the euro zone, consumption and inflation will be in focus. The June CPI numbers for Germany, France, Italy and the euro zone are due and will be the last ones to be published before the ECB’s July meeting, expected to kick off the hiking path. Consumer confidence measures are also to be released.
  • As China started relaxing some COVID-19 containment measures in June, investors are eager to find out China's industrial data and final manufacturing PMIs for the month. The measures should also have brought some relief to global supply chains.
  • A policy panel gathering Chair Powell, President Lagarde and Governor Bailey at the European Central Bank's Forum on Central Banking will be a key event to watch.

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