A very quiet atmosphere next week for EMEA and Latam with Poland expecting a calm environnment given the upcoming data releases
We expect sub-consensus activity readings. Industrial production is expected to decline from 5.4% YoY to 3.8% YoY; a reflection of lower external demand from the Eurozone and a soft automotive performance. We predict retail sales to moderate at 7.2% YoY due to durable goods sales stagnating.
The developed markets this coming week are expected to be relatively steady given that the outcome of the trading war is still ambiguous
If it wasn’t for the concerns on global trade we would likely see market expectations for US interest rates be significantly higher than they currently are. After all, the US economy looks set to have grown by an annualised 4% in 2Q18 while inflation looks set to breach the 3% level next month. At the same time the US is experiencing its strongest jobs market for around 50 years.
Nonetheless, the uncertainty that protectionist measures creates poses clear risks for investment and hiring in coming quarters, hence the markets’ caution. As such, the tone of the Federal Reserve’s semi-annual monetary policy report to Congress will be of huge importance to gauge the likely path of policy in the second half of the year. We expect it to suggest that the market is probably right to expect two further 25bp rate rises this year. In terms of US data the focus will be retail sales and given the strength in the jobs market and the robust readings for consumer confidence we expect the spending numbers to be strong.
Asian activity data doesn’t yet speak about the trade war, which has just started. But it won't be too long
Next week in Asia kicks off with China’s GDP data for the second quarter. This and a slew of trade releases elsewhere in the region will be examined in light of the ensuing global trade war. Indonesia’s central bank has seen no fruits from the 100bp policy rate hikes in supporting the local currency and we don't think it will hike again next week.
Discover what ING analysts are looking for next week in our global economic calendars