Key Events This Week: All Eyes On Powell

This week's calendar features a steady stream of potentially interesting events culminating with Fed Chair Powell's semi annual Monetary Policy Report, as well as the currently ongoing summit between President's Trump and Putin, the overnight EU-China summit, US earnings including the remaining banks, the relatively subdued China Q2 GDP data and the slowdown in US retail sales data.

Fed Chair Powell is due to deliver his semiannual Monetary Policy Report to the Senate Banking Committee in Washington on Tuesday and then the House Financial Services Committee on Wednesday. Both events will include Q&A. The text of the report is not usually a market mover and it’s the Q&A next week which is more likely to be market sensitive. Last week's comments from Powell were generally upbeat but the market might be focused on how the risks to the outlook have changed post the latest trade developments. Staying with the Fed, Vice Chair for Supervision Randal Quarles (neutral/voter) is to make introductory remarks at a roundtable event on Thursday and St Louis Fed President Bullard (dove/non-voter) is due to speak on Friday on the US economy and monetary policy.

Also of note is the summit between President’s Trump and Putin in Helsinki, which is currently in progress and which should add a bit of political drama to the start of the week. Expect the subject of economic sanctions on Russia imposed by the US and EU to be fairly high up the list of agenda items.

Meanwhile as DB's Craig Nicol notes, earnings will start to ramp up next week with 64 S&P 500 companies set to report including the remaining US banks and some of the tech heavyweights. In terms of the highlights, we'll get Netflix after the close, with Bank of America reporting generally solid numbers earlier, while Johnson and Johnson and Goldman Sachs are due on Tuesday, Morgan Stanley, IBM and eBay on Wednesday, Microsoft on Thursday, and General Electric on Friday.

As for data, well the most anticipated print of the week already hit when we get the Q2 GDP print in China, and which slowed again in line with expectations, at 6.7%, the slowest growth in 2 years, Separately, while Chinese retail sales beat, the market was disappointed by the slowdown in industrial production.

In the US it's a particularly light week for data and the main highlight is the just reported June retail sales report, which came in line but missed modestly ex autos and gas, following an upward revised May print. Other data worth highlighting in the US is June industrial production on Tuesday (+0.5% mom expected), June housing starts and building permits prints on Wednesday and the June leading index on Thursday.

It's not alot more exciting for data in Europe although the focus should lie with the UK where there is more than enough to keep markets busy, especially with the August BoE policy meeting outcome still far from certain. On Tuesday we'll get the May and June employment report where expectations are for a +2.7% 3m/yoy weekly earnings ex bonus print, and no change in the unemployment rate at 4.2%. On Wednesday we'll then get the June CPI/RPI/PPI data docket. Core CPI is expected to hold at +2.0% yoy. On Thursday June retail sales data is then due in the UK. It's worth noting that we'll also get the broad Eurozone final June CPI report on Wednesday with the market consensus for a +1.0% yoy reading, unchanged from May.

Other interesting things to watch out for next week include China Premier Li Keqiang co-hosting the China-EU summit with European Council President Tusk and European Commission President Juncker on Monday. One would expect there to be plenty of chat about trade, as well as the WTO. The IMF's latest World Economic Outlook will also be out on Monday, while on Tuesday Japan PM Abe will meet Tusk and Juncker to sign an EU-Japan trade agreement. Finally on Thursday the US Commerce Department is due to start two days of hearings into an investigation on if auto imports pose a national security threat or not.

Courtesy of Deutsche Bank, here is a summary of the key events by day:

Monday: We look set to start the week with a bit of a bang on Monday with the main data highlight being the early morning Q2 GDP release in China. As well as that, we'll also get June retail sales, industrial production and fixed asset investment data in China. In Europe, the July Rightmove house price data in the UK followed by the release of the May trade balance for the Eurozone are due. In the US the highlight is likely to be the June retail sales report, while the July empire manufacturing report and May business inventories data are also due. Away from that, Bank of America and Netflix are due to report their Q2 earnings while the IMF is due to release it's World Economic Outlook. Politics is likely to be a big focus too with US President Trump holding talks with his Russian counterpart President Vladimir Putin and the China - EU summit starting in Beijing.

Tuesday: The main highlight on Tuesday is likely to be Fed Chair Powell delivering his semi-annual testimony to the Senate Panel in the afternoon. Datawise, May and June employment data in the UK will be a focus, while June EU27 new car registrations and the final June CPI release in Italy are also due in Europe. In the US we've got June industrial and manufacturing production prints along with the July NAHB housing market index release all scheduled. Q2 earnings for Goldman Sachs and Johnson & Johnson are also due.

Wednesday: With nothing of note in Asia overnight on Wednesday, it's straight to Europe where we get June CPI, PPI and RPI data in the UK along with the May house price index print. This is followed by the release of the final June CPI report for the Euro area, along with May construction output data. In the US, June housing starts and building permits data is due before the Fed's Beige Book in the evening. Morgan Stanley, IBM and eBay will also be reporting their Q2 earnings. Fed Chair Powell will also appear before the House Financial Services Committee.

Thursday: It's a quiet day for data on Thursday. Overnight we'll get the June trade balance reading in Japan. This is followed by the release of the June retail sales print in the UK, while in the US, the latest weekly initial jobless claims data is then followed by the release of the July Philadelphia Fed business outlook and June leading index prints. Away from that, Microsoft will be releasing its Q2 earnings. The Fed's Quarles is also due to speak in the afternoon.

Friday: Overnight on Friday we'll get the June CPI print in Japan. In Europe, June PPI in Germany is followed by the May current account balance reading for the Eurozone and June public finances data in the UK. There is nothing of note in the  US on Friday. Away from the data, the Fed's Bullard will speak on the U.S. economy and monetary policy at a Glasgow Chamber of Commerce breakfast in Glasgow, Kentucky in the afternoon. We'll also get Q2 earnings from General
Electric on Friday.

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Finally, here is Goldman with a detailed breakdown alongside consensus expectations:

The key economic releases for the coming week include retail sales on Monday and industrial production on Tuesday. In addition, there are several scheduled speaking engagements by Fed officials this week, including Fed Chairman Powell’s testimony to Congress on Tuesday and Wednesday

Monday, July 16

  • 08:30 AM Retail sales, June (GS +0.3%, consensus +0.5%, last +0.8%); Retail sales ex-auto, June (GS +0.2%, consensus +0.3%, last +0.9%); Retail sales ex-auto & gas, June (GS +0.2%, consensus +0.4%, last +0.8%); Core retail sales, June (GS +0.2%, consensus +0.4%, last +0.5%): We estimate core retail sales (ex-autos, gasoline, and building materials) rose at a subdued pace in June (+0.2% mom sa), reflecting softer chain store results and a possible pullback among clothing and department stores. Based on the rebound in auto SAAR but a seasonally adjusted decline in gasoline prices, we estimate 0.3% and 0.2% respective increases in the headline and ex-auto measures.
  • 08:30 AM Empire State manufacturing index, July (consensus +21.0, last +25.0)
  • 10:00 AM Business inventories, May (consensus +0.4%, last +0.3%)

Tuesday, July 17

  • 09:15 AM Industrial production, June (GS +0.5%, consensus +0.5%, last -0.1%); Manufacturing production, June (GS +0.7%, consensus +0.6%, last -0.7%); Capacity utilization, June (GS +78.2%, consensus +78.2%, last +77.9%): We estimate industrial production rose 0.5% in June, largely driven by a sizeable rebound in auto manufacturing as production resumed at a light truck manufacturing plant following a fire in early May. We estimate capacity utilization edged up three tenths to +78.2% in June.
  • 10:00 AM Fed Chairman Powell appears before the Senate Banking Committee: Federal Reserve Chairman Jerome Powell will appear before the Senate Banking Committee to deliver the Fed’s semi-annual Monetary Policy Report to Congress and answer questions from lawmakers. We expect his testimony to be in line with the June FOMC statement and the post-meeting press conference.
  • 10:00 AM NAHB housing market index, July (consensus 69, last 68)

Wednesday, July 18

  • 08:30 AM Housing starts, June (GS -3.5%, consensus -2.2%, last +5.0%); Building permits, June (consensus +2.2%, last -4.6%): We estimate housing starts declined 3.5% in June, retracing some of the 5.0% May rise, which was entirely concentrated in the Midwest. We expect a softer number because single-family starts now look elevated relative to single-family permits.
  • 10:00 AM Fed Chairman Powell appears before the House Financial Services Committee: Federal Reserve Chairman Jerome Powell will appear before the House Financial Services Committee to deliver the Fed’s semi-annual Monetary Policy Report to Congress and answer questions from lawmakers.
  • 02:00 PM Beige Book, July FOMC meeting period: The Fed’s Beige book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The June Beige Book reported growth at a moderate pace across the country and noted a positive outlook for overall near-term growth, though some contacts continued to express concerns related to trade policy uncertainty. It also reported that labor markets continued to tighten, leading some firms to increase wages or total compensation. In the July Beige book, we look for additional anecdotes related to trade policy uncertainty, price inflation, and wage growth.

Thursday, July 19

  • 08:30 AM Initial jobless claims, week ended July 14 (GS 225k, consensus 221k, last 214k); Continuing jobless claims, week ended July 7 (consensus 1,725, last 1,739k): We estimate initial jobless claims increased by 11k to 225k in the week ending July 14, 2k above the prior four-week moving average. We continue to expect a temporary boost from auto plant shutdowns. Consensus expects continuing claims — the number of persons receiving benefits through standard programs — to decline 14k to 1,725k.
  • 08:30 AM Philadelphia Fed manufacturing index, July (GS +24.0, consensus +21.5, last +19.9); We estimate the Philadelphia Fed manufacturing index rebounded 4.1pt to 24.0 in July, retracing part of the 14.5pt sharp decline to 19.9 in June. Given encouraging industrial sales commentary, we expect an elevated reading this month.
  • 09:00 AM Vice Chairman for Supervision Quarles (FOMC voter) speaks: Federal Reserve Vice Chairman for Supervision Randal Quarles will give introductory remarks to an Alternative Reference Rates Committee Roundtable in New York via pre-recorded video. Prepared text is expected.

Friday, July 20

  • 08:00 AM St. Louis Fed President Bullard (FOMC non-voter) speaks; St. Louis Fed President James Bullard will present on the U.S. economy and monetary policy at a Glasgow Chamber of Commerce Breakfast in Glasgow, Kentucky. Prepared text and audience and press Q&A are expected.

Source: DB, Goldman, BofA