Last Week In Markets: July 18 - July 22 2022

In the US, the July flash S&P Global Manufacturing Purchasing Managers’ Index (PMI) was 52.3, slightly higher than forecast (readings over 50 indicate expansion). The July flash S&P Global Services PMI was 47.0, lower than expected. The Conference Board’s Leading Economic Index fell 0.8% m/m in June, missing expectations.

In the eurozone, final June headline and core (excluding food and energy) consumer prices rose 8.6% y/y and 3.7% y/y, respectively—in line with estimates. The July flash S&P Global Manufacturing and Services PMIs were 49.6 and 50.6, respectively—both lower than expected. The European Central Bank (ECB) announced a bigger-than-expected policy rate hike of 50 basis points—bringing its deposit facility rate up to 0% from -0.5%. The ECB hike—its first in more than a decade—comes against the broader backdrop of central banks hiking policy rates around the world, heightening fears that monetary policy tightening will push the global economy into recession. While central banks aggressively raising short rates has flattened the yield curve lately, even if a mild inversion were to occur, it isn’t an automatic recession trigger. For more on central banks, please see our 7/20/2022 commentary, “Our July Fed Meeting Preview.”

In the UK, June headline and core (excluding food and energy) consumer prices rose 9.4% y/y and 5.8% y/y, respectively. The July flash S&P Global/CIPS Manufacturing PMI was 52.2, exceeding forecasts, while the flash Services PMI matched expectations at 53.3. June retail sales decreased 0.1% m/m and 5.8% y/y. The unemployment rate remained at 3.8% in May.

In Japan, June consumer prices rose 2.4% y/y while core-core consumer prices (excluding food and energy) rose 1.0% y/y. The July flash Jibun Bank Manufacturing PMI was 52.2, in line with consensus forecasts. July flash Jibun Bank Services PMI was 51.2, declining from the previous month but remaining expansionary.

The Week Ahead

The US and eurozone release first estimates of Q2 2022 GDP. The US reports preliminary June durable goods orders. The UK and eurozone report June money supply. The eurozone releases flash July consumer price data. Japan reports final June trade data and preliminary June industrial production and retail sales. China reports July PMI figures,