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Analysts at Nomura offered their outlook for the week ahead.  

Key Quotes:

“United States | Data preview

The week ahead: We expect robust Q2 real GDP growth of 4.6% q-o-q saar

Existing home sales (Monday): We forecast a 0.1% m-o-m  increase in existing home sales to 5435k  saar  in June from 5430k in May. Pending home sales were weak in May and April. In addition, structural factors such as rising mortgage rates and  shortage  of units for sales likely prevailed. Thus, we expect only a modest improvement in existing single-family home sales in June. In addition, volatile existing condo and co-op sales rose 1.6% m-o-m  in May. This increase may have reverted in June, lowering total sales.

New home sales (Wednesday): New home sales likely declined 3.0% m-o-m  to 668k  saar  in June. While month-to-month changes tend to be volatile, we continue to expect gradual improvement in new home sales. For June, consumer demand likely remained steady but supply-related factors may have continued to weigh on sales. In particular, much of the newly-built housing stock has been concentrated on more expensive units, exacerbating the supply shortage in the lower-end segment of the market.

Advanced goods trade balance (Thursday): Based on incoming container data at US ports, goods exports growth likely slowed in June after a strong jump in May, which was driven by a transitory surge in soybean exports. Soybean exports will likely decline in coming months, slowing overall exports growth. Moreover, container data suggest that nominal imports likely rose sluggishly in June. All in all, we expect the advance estimate of goods trade balance for June to register $65.3bn deficit following $64.8bn in May.

Durable goods orders (Thursday): We expect a modest 0.3% m-o-m  increase in  extransportation  durable goods orders in June. The ISM new orders index edged down slightly but remained high at 63.5 in June. The industrial production report for June indicated healthy growth in ex-transportation durable goods output. These data appear consistent with the solid momentum in the industrial sector and a pickup in business equipment investment in Q2. Among transportation equipment, orders for motor vehicle and parts likely rose sharply. The industrial production report indicated that truck assemblies picked up in June following significant disruptions in May. Further, civilian aircraft orders likely boosted transportation orders considering industry data. Altogether, we expect a 3.0% m-o-m  increase in total durable goods orders in June.

Q2 GDP, first estimate (Friday): We forecast robust 4.6% q-o-q  saar  real GDP growth for Q2, mostly driven by solid contributions from personal consumption, nonresidential fixed investment, and government consumption. Consistent with the strong  labor  market, personal consumption expenditure likely rose solidly in Q2 after a lull in Q1. Investment in nonresidential structures likely continued to grow at a healthy pace, in line with the Q2.  

Senior Loan Officer Opinion Survey, which implied that lending standards on nonfarm nonresidential commercial real estate loans eased in Q2. Moreover, elevated shale oil and gas extraction activity likely boosted oil-related structures investment. In addition, federal government spending likely rose solidly considering higher  defense  spending during Q2. Residential investment, however, likely remained as a drag as sales activity softened and outlay on home improvement and mobile homes weakened. Moreover, incoming data on net  defense  outlay and state and local public construction outlay point to a solid pickup in federal and state & local government spending in Q2. In addition,  trade  deficit narrowed significantly in April and May, pointing to  significant  boost from net exports to real GDP growth. Some of the  narrowing  in  trade  deficit, however, was led by a transitory surge in soybean exports ahead of retaliatory tariffs by US trading partners which will likely wane in coming months.

Note the BEA will release the “comprehensive revision” of the National Income and Product Accounts along with its advance estimate for Q2 GDP. Annual revisions for monthly Personal Income and Outlays tables will be released on 31 July with June data.  

University of Michigan consumer sentiment (Friday): The headline index of the University of Michigan consumer survey fell 1.1pp to 97.1 in July. Inflation expectations at the one-year horizon ticked down 0.1pp to 2.9% while those at the 5-10 year horizon declined by 0.2pp to 2.4%. The preliminary survey results suggest that consumer sentiment may be sensitive to concerns about tariffs. The report indicated that “[the proportions of respondents citing]negative concerns about the impact of tariffs have recently accelerated, rising from 15% in May, to 21% in June, and 38% in July.” Respondents who expressed negative views of the tariffs expressed more bearish expectations on future conditions with a higher expected inflation rate. For the final estimate for July, we expect consumers to maintain increased concerns about tariffs.

Euro area | Data preview

The week ahead Euro area July flash  PMIs  data and UK CBI Survey will be in focus next week.

Euro area  PMIs, July flash (Tuesday): We expect the euro area composite PMI for July to increase to 55.3 from 54.9 in June. At the sector level, we expect the regional manufacturing PMI to dip to 54.6 from 54.9 and the services PMI to increase to 55.9 from 55.2. While the escalation in world trade disputes should worsen sentiment, domestic demand  is still appears  buoyant. Overall levels of these indices are still high relative to their long-run averages, and our forecast for July’s flash reading would be consistent with euro area GDP growth of around 0.5% q-o-q in Q3 2018.

UK CBI industrial trends survey, July (Tuesday): Every quarter, the CBI publishes both its monthly survey (which contains only a limited number of indicators, of which total orders is probably the most widely watched) and its quarterly survey. In the latter, aside from the headline measure of optimism, look for indicators of  capex, employment, spare capacity and factors limiting output, exports and investment.

Germany Ifo survey, July (Wednesday): We expect the Ifo Business Climate Survey to decline to 100.9 in July from 101.8 in June. We think this decline will be driven mainly by a further decline in business expectations (we forecast a drop in Ifo business expectations to 97.4 from 98.6 in June). With trade tensions intensifying between Germany and the US, we expect the deterioration in sentiment to continue in July. Crucial to this issue will be the meeting between Trump and Junker on 25 July, during which the main focus will be on possible tariffs on the auto sector in Europe.  

UK Finance approvals for house purchase, June (Wednesday): While there is  typically  limited market reaction to this number, it is worth bearing in mind that it is closely correlated with the BoE’s official data published the following week.

UK CBI distributive trades survey, July (Wednesday): The reported balance of this survey rose to its highest since last September in June (32%), probably helped by the weather and the World Cup. The expected balance published last month suggests that it may not remain at such an elevated level although, with real wages recovering and the weather remaining supportive, we think the survey should remain reasonably solid.

ECB Governing Council meeting, July (Thursday): Policy announcements at June’s ECB meeting were surprising more in timing than in content. The ECB made some important changes to guidance on its Asset Purchase Programme (APP) and rates. With these announcements, a long period of inaction is likely; however, some uncertainty remains as to what the ECB actually meant by “through the summer” in the context of leaving rates on hold. A recent article citing “policymakers speaking to Reuters on condition of anonymity” suggested that the wording was sufficiently vague for some to argue it is consistent with no move until the 24 October 2019 meeting, while others believe it could be as soon as 25 July 2019. We continue to forecast the first 15bp hike in the deposit rate in September 2019, followed by a further 10bp hike in all policy rates in Q4 2019.

Japan | Data preview

The week ahead We expect Tokyo core CPI inflation to slow in July as boosts from highly volatile items drop out of the picture.

July Tokyo core CPI (all items,  ex fresh  food) (Friday): We expect Tokyo core CPI inflation to come in at 0.6% y-o-y  for July, lower than the 0.7% recorded in June. We also think that the BOJ version of the  core core  CPI, which excludes fresh food and energy, will slow in July relative to June, coming in at 0.3%. The higher rates of inflation seen for accommodation and overseas package tours made substantial contributions to the Tokyo core inflation rate in June, but these are relatively volatile items, and we think that their positive impact on inflation will drop out of the picture in July. Household durables, which have mostly tended to depress the core inflation rate recently, boosted it in June. In the corporate goods price index (CGPI), prices of household durables fell 1.3% y-o-y  in June, representing a small improvement from the 1.6% y-o-y  decline in May. However, the CGPI usually leads the CPI to some extent, and we think it is still too early for wholesale prices to be reflected in retail prices. Prices of household durables tend to be relatively volatile, and it is possible that their boost to the Tokyo CPI in June was merely temporary. In view of the weakness of consumer spending, we do not think that prices have embarked on an upward trend as yet. Meanwhile, energy prices, including pump prices for gasoline, have not risen much recently, and we expect overall core inflation to be lower in July than in June.

Asia | Data preview

Australia: We forecast a 0.5% q-o-q rise in headline CPI inflation and a 0.4% q-o-q rise in the underlying or trimmed mean inflation, which translates into a 0.3pp increase in y-o-y  inflation in Q2 from Q1. Higher global oil and local fuel prices in Q2 should boost headline CPI inflation in Q2, but underlying price pressures appear more subdued. Our core inflation forecast looks to be one-tenth below the current Bloomberg consensus. We note that AUD fell in Q2, although we expect any consequent inflation impulse to be quite subdued, particularly given spare capacity and fierce retail competitive pressures.”