Macroeconomics: The Day Ahead for 2 August

  • Minimal run of statistics features South Korea CPI, Spain Unemployment and US ADP Employment; digesting BoJ Uchida comments and expected BoT rate hike, awaiting Brazil rate cut; another busy day for US corporate earnings; Germany and Canada to sell debt

  • BoJ Uchida comments unlikely to dispel market view of slow creep to ultra easy policy exit

  • US ADP Employment seen reverting to ‘normal’ increase, after June surge proved again to be poor guide to Payrolls


As is often the case on the second working day of the month, the data and events schedule is rather sparse. There are South Korea’s lower-than-expected CPI and Spanish Unemployment to digest, while ahead lies US ADP Employment. Another very busy day for corporate earnings, has the following among its likely highlights|: Albemarle, Cognizant Technology Solutions, Du Pont, Fidelity, Goodyear, Marathon Oil, MetLife, Phillips 66, Qualcomm, Simon Property, Xylem and Zillow. There are no scheduled G7 central bank speakers other than the comments from BoJ’s Uchida overnight, which will not dispel market view that the BoJ is on a slow creep to exiting its ultra-easy policy and the accompanying headwinds for global bond markets. The Bank of Thailand hiked rates as expected 25 bps, and Brazil’s BCB is expected to follow Chile’s BCC and initiate a rate cut cycle, though with a much more modest 25 bps cut to 13.50%. Germany sells 2026 & 2038 Bunds and Canada sells 2-yr. US ADP Employment is expected to slow to a more ‘normal’ 190K after June’s very strong 467K rise, which proved to be yet another poor guide to the soft Payrolls reading, with anything sub 200K likely to reinforce the current ‘soft landing’ narrative. But the fall-out from the BoJ policy tweak, and a more sanguine ‘under the hood’ (i.e. beyond ‘EPS and revenue’ beats) look at the run of corporate earnings reports, and another round of sluggish Manufacturing PMIs yesterday looks to be dominating risk appetite at the current juncture.

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