of the week ahead

Transcript

Matt Jones

Welcome to "The Long & Short of the Week Ahead", a production of Eurizon SLJ Capital that takes a look at the macro-economic themes of the week ahead and has been recorded for professional investors.

My name is Matt Jones, Head of Distribution for Eurizon SLJ Capital, and I'm joined by Neil Staines, Senior Portfolio Manager.

Welcome back, Neil, it's great to have you here with us again.

Neil Staines

Thank you very much Matt. It's great to be here.

Matt Jones

So it might be the summertime and we may have a few listeners perhaps sunning themselves either home or abroad. But there's no letup really from a markets perspective. Next week, it's a big week for data. So perhaps you can talk us through what you're going to be looking at in particular.

Neil Staines

Absolutely, yeah. Thanks, Matt. You know, in the midst of the summer period for financial markets, it does feel as if participation is notably lower, but there are still some important themes to look out for.

So firstly, while much of the focus over past weeks, has been very US focused, we do have some interesting data from the rest of the world next week that deserves a look. At the start of the week, we get the monthly data suite from China for the month of July. That's industrial production, retail sales, fixed asset investment and the unemployment rate. All will be keenly watched as a guidance as to how the conflicting economic impulses of COVID reopening and the well publicized property market concerns are playing out in the high frequency data. Very interesting backdrop there. In Europe, we get the German ZEW survey for August, where markets will be keen to monitor the current impact on economic growth expectations, given the very challenging energy and global export growth concerns, something to watch for on Tuesday. Outside of that, we get the minutes of the Reserve Bank of Australia policy meeting from earlier in the month and a live policy meeting from the other side of the Tasman and that's from the RBNZ as they are expected to raise rates 50 basis points to 3%. Policy and forward guidance from the RBNZ that will be a particular focus, given that they are likely still out ahead of the rest of the world in its tightening cycle and implications therefore, for other global central banks.

Secondly, in the UK, following on from the GDP report at the end of this week, showing a modestly better than expected outcome for both the month of June, although distorted for this use Jubilee effects, and for Q1 overall were recorded just a point 1% Drop, potentially even to be revised up subsequently. The data focus will stay with the UK next week. The employment report, inflation data and retail sales all for July will be very closely watched amid a broader debate about the intensifying real income squeeze in light of unprecedented energy price hikes. The narrative will continue to be shaped by the ongoing Prime Minister's contest and thus, the likely path of fiscal policy with that itself, shaped against the Bank of England's current prophecies of economic doom for a UK economy in the next years in the absence of fiscal support.

And then finally, back to the US. In the blog, this week, we discussed the implications of the albeit tentative or nascent term in the US inflation this week, and how this interacts with fed communications. Ultimately, we're the view that this turn lowers both inflation risk premia and the growth risk premia and thus widens this narrow path towards a soft landing. This evolution should be a positive for US equities and risk assets, but not likely for the dollar. So that's something to look out for in the medium term. Next week, we get the Fed minutes, where markets will be paying close attention to the iterative Fed policy communication key for us is to maintain consistency of the language with the summary of economic projections and the dots from the June forecast round in keeping with a fully priced, forward guided Fed rate path to a three and a quarter, three and a half percent rate at the end of this year. Communication remains key, especially in a quiet summer week.

Matt Jones

Thank you, Neil, a quiet summer week but still plenty to be looking at in the week ahead there. Well, thank you once again for joining us and outlining your thoughts on the week ahead. I very much look forward to catching up with you again next week.

Thank you for joining us for "The Long and Short of the Week Ahead". Further insights are available on our website eurizonsljcapital.com/insights. We look forward to you joining us again next week for more insights into macro-economic events and "The Long and Short of the Week Ahead".

Disclosure

None of the contents of this document should be understood as constituting research on investment matters, or as a recommendations, advice or suggestions, implicit or explicit, with respect to an investment strategy involving the financial instruments discussed, or the issuers of the financial instruments, nor as a solicitation or offer, nor as consulting on investment matters, of a legal, fiscal, or other nature. All the companies of the Intesa Sanpaolo Group, its administrators, representatives, or employees, decline any responsibility (fault-based or otherwise) deriving from indirect damages potentially caused by the use of this communication or its contents, or in any case deriving in relation to this document, nor may they be consequently held liable for any of the above. The information provided and the opinions contained in this document are based on sources considered reliable and in good faith. However no declaration or guarantee is offered by Eurizon SLJ Capital Limited, explicitly or implicitly, on the accuracy, exhaustiveness and correctness of the information, and there is no guarantee that results, or any other future events, will be compatible with the opinions, forecasts, or estimates contained herein.

Views accurate as at the time of publication. Opinions expressed by the authors are their own and do not necessarily reflect those of Eurizon SLJ Capital Limited, Eurizon Capital SGR or the Intesa Sanpaolo Group.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

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