This month has dragged on and seems to be lasting forever. One reason could be that it is my last full month as a keyboard warrior, toiling as the voice of reason as I try to make sense of the nonsense in the financial markets. The second, and more likely, is that the US FOMC policy meetings falls at the end of the month, instead of its usual mid-month slot. But as the last week of July arrives, so does the FOMC policy meeting, with the results due out in the early hours of Thursday morning Singapore time. For what its worth, I am in Team Taylor, and going for 75 basis points, with 100 being a bridge to far. Last Friday’s price action may have softened the ardour of the 100 basis point hikes on the committee as well. Equity markets finished sharply lower, ostensibly because of soft social media earnings, but given Wall Street’s schizophrenic nature of late, it was just as likely to be recession fears, booking some short-term profits, and cutting exposure ahead of the weekend and any potential risks that emerged over it. Currency markets had a noisy day but finished not far from unchanged across the DM and EM space, so I don’t think Friday’s equity sell-off was a structural move. Friday’s S&P Global Manufacturing and Services PMIs for Europe and the US were disappointing to say the least, coming in softer across the board. Eurozone bond yields moved sharply lower as the market falls over itself to price in a recession there. Even Italian BTPs rallied. That seems to have flowed into the US bond market as well, with the US yield also moving sharply lower across the 5 to 30-year tenors, and even 2-years closed under 3.0%. The R-word remains on everyone’s lips. Even gold managed to string two consecutive positive days together, while oil markets were broadly unchanged. Agricultural commodities fell on Friday after Russia and Ukraine signed a Turkey-brokered deal to allow Ukrainian grain exports to resume from Black Sea ports such as Odessa. Naturally, Russia decided to rain cruise missiles down on Odessa over the weekend, including one that hit a grain silo. That has seen wheat futures rise by 2.0% this morning and has led to some US Dollar strength and extended the risk-off tone to equity markets. Various news outlets are also running a story about China’s increasingly strident warnings behind the scenes to US officials around Nancy Pelosi’s intended visit to Taiwan sometime in the next few weeks. This week features a raft of heavyweight US second-quarter earnings from tech heavyweights, which could drive volatility on stock markets in addition to the FOMC. Alphabet and Microsoft announce tomorrow, Meta on Wednesday, perhaps the highest risk one looking at the ad-strewn content-light wasteland of my Facebook and Instagram feed. Apple announces after the bell on Thursday evening NYT. Falling across the FOMC, we could be in for some tasty volatility around the mid-week hump. Alongside the FOMC, we have the German Ifo this afternoon, US Durable Goods Wednesday, German Inflation and US GDP on Thursday, and German, French, Italian, Spanish and Eurozone GDPs Thursday, and then Eurozone Inflation prints and US Personal Consumption and Expenditure data and the Chicago PMI on Friday. Slap in some China property and Taiwan risk, Eastern Europe risk, and the US President who has covid, and good luck picking the bones out of this week. It’s the show with everything but Yul Brunner. I’ll be in Bali next week for four days, and mightily glad I am, watching the dust settle from the distance. Closer to home, we see Singapore Core Inflation for June (4.20% exp. YoY), and Headline Inflation (6.20% exp YoY), released at 1300 SGT today. Having already made an unscheduled monetary tightening this month, higher than expected inflation data this afternoon will lock-and-load the Monetary Authority of Singapore to tighten again at their scheduled October meeting. I am in Singapore this week, and although COE’s have hit record high prices in July, I am still seeing a lot of brand new Mercedes and Range Rovers being driven around. I also paid just over seven dollars for a quite small, but pleasing, hipster latte in Singapore this morning. My feeling is that inflation will come in on the high side this afternoon, which may give local equities some headwinds this week, while supporting the Singapore Dollar. On a similar note, Australia releases its Q2 CPI on Wednesday, and we can expect volatility over the number as the street uses it to reprice the trajectory of the Reserve Bank of Australia tightening cycle. The Australian Dollar’s value is a function of international investors macro outlook for the world economy, risk-on/risk-off for those of us in pilot fish part of the financial...

This month has dragged on and seems to be lasting forever. One reason could be that it is my last full month as a keyboard warrior, toiling as the voice of reason as I try to make sense of the nonsense in the financial markets. The second, and more likely, is that the US FOMC policy meetings falls at the end of the month, instead of its usual mid-month slot. But as the last week of July arrives, so does the FOMC policy meeting, with the results due out in the early hours of Thursday morning Singapore time. For what its worth, I am in Team Taylor, and going for 75 basis points, with 100 being a bridge to far. Last Friday’s price action may have softened the ardour of the 100 basis point hikes on the committee as well. Equity markets finished sharply lower, ostensibly because of soft social media earnings, but given Wall Street’s schizophrenic nature of late, it was just as likely to be recession fears, booking some short-term profits, and cutting exposure ahead of the weekend and any potential risks that emerged over it. Currency markets had a noisy day but finished not far from unchanged across the DM and EM space, so I don’t think Friday’s equity sell-off was a structural move. Friday’s S&P Global Manufacturing and Services PMIs for Europe and the US were disappointing to say the least, coming in softer across the board. Eurozone bond yields moved sharply lower as the market falls over itself to price in a recession there. Even Italian BTPs rallied. That seems to have flowed into the US bond market as well, with the US yield also moving sharply lower across the 5 to 30-year tenors, and even 2-years closed under 3.0%. The R-word remains on everyone’s lips. Even gold managed to string two consecutive positive days together, while oil markets were broadly unchanged. Agricultural commodities fell on Friday after Russia and Ukraine signed a Turkey-brokered deal to allow Ukrainian grain exports to resume from Black Sea ports such as Odessa. Naturally, Russia decided to rain cruise missiles down on Odessa over the weekend, including one that hit a grain silo. That has seen wheat futures rise by 2.0% this morning and has led to some US Dollar strength and extended the risk-off tone to equity markets. Various news outlets are also running a story about China’s increasingly strident warnings behind the scenes to US officials around Nancy Pelosi’s intended visit to Taiwan sometime in the next few weeks. This week features a raft of heavyweight US second-quarter earnings from tech heavyweights, which could drive volatility on stock markets in addition to the FOMC. Alphabet and Microsoft announce tomorrow, Meta on Wednesday, perhaps the highest risk one looking at the ad-strewn content-light wasteland of my Facebook and Instagram feed. Apple announces after the bell on Thursday evening NYT. Falling across the FOMC, we could be in for some tasty volatility around the mid-week hump. Alongside the FOMC, we have the German Ifo this afternoon, US Durable Goods Wednesday, German Inflation and US GDP on Thursday, and German, French, Italian, Spanish and Eurozone GDPs Thursday, and then Eurozone Inflation prints and US Personal Consumption and Expenditure data and the Chicago PMI on Friday. Slap in some China property and Taiwan risk, Eastern Europe risk, and the US President who has covid, and good luck picking the bones out of this week. It’s the show with everything but Yul Brunner. I’ll be in Bali next week for four days, and mightily glad I am, watching the dust settle from the distance. Closer to home, we see Singapore Core Inflation for June (4.20% exp. YoY), and Headline Inflation (6.20% exp YoY), released at 1300 SGT today. Having already made an unscheduled monetary tightening this month, higher than expected inflation data this afternoon will lock-and-load the Monetary Authority of Singapore to tighten again at their scheduled October meeting. I am in Singapore this week, and although COE’s have hit record high prices in July, I am still seeing a lot of brand new Mercedes and Range Rovers being driven around. I also paid just over seven dollars for a quite small, but pleasing, hipster latte in Singapore this morning. My feeling is that inflation will come in on the high side this afternoon, which may give local equities some headwinds this week, while supporting the Singapore Dollar. On a similar note, Australia releases its Q2 CPI on Wednesday, and we can expect volatility over the number as the street uses it to reprice the trajectory of the Reserve Bank of Australia tightening cycle. The Australian Dollar’s value is a function of international investors macro outlook for the world economy, risk-on/risk-off for those of us in pilot fish part of the financial...

Next week, the FOMC, the Fed's monetary policy-making body, meets. We expect a 75 basis point (bp) hike in key interest rates, in line with the market. At the last meeting, Fed Chairman Powell announced that there would be a decision on a 50bp or 75bp hike in July. The crucial economic data released since then clearly favor the stronger hike. The inflation rate for June showed a further increase, reaching 9.1%. Energy and food prices are the decisive factors for the continuous increases that have been seen for months. In the remaining areas (core inflation), the inflation rate has declined in recent months, but only very slowly. Although sharp price increases from the previous year have dropped out of the calculation, at the same time, current inflationary pressures have been high since last fall and show no signs of abating. The labor market data for June published earlier showed a continued robust development. The number of newly created jobs has been stable at a high level for months. The unemployment rate has remained near record lows. Finally, retail sales showed solid growth in private consumer demand. Notably, the sharp rise in inflation also fueled short-term expectations of a 100bp rate hike. However, after a number of FOMC members rejected such a rate hike, the likelihood of this happening is low. The most exciting thing about the upcoming FOMC meeting should therefore be the outlook. However, we do not expect any changes compared to June. Fed Chairman Powell should also put a rate hike of 50bp or 75bp on the agenda for the September meeting. Inflation developments will remain the key determinant. The further development is very uncertain, as it will be determined, among other things, by supply bottlenecks depending on the conflict with Russia and the lockdowns in China. In general, however, the economy in the US and globally has started to cool down, which should counter inflationary pressure. Commodity prices, for example, have already fallen significantly. We expect to see a slight reduction in the inflation rate by the September meeting. Furthermore, based on the latest survey of FOMC members in June, next week's rate hike will bring policy rates very close to a neutral level, which should allow the Fed to proceed somewhat more slowly, so that in total we expect a rate hike of 50bp in September. EZ - Inflation could rise slightly again Next week (July 29), a first flash estimate of inflation for July will be published. In June, inflation rose further to 8.6% y/y, mainly due to increasing momentum in food and energy prices. By contrast, core inflation stabilized at around 3.7% y/y. As a result of the development of food, electricity and gas prices, there are also upside risks to the inflation rate in July. By contrast, the slight drop in the price of gasoline and diesel in some countries should have a dampening effect on inflation. In view of the recent decline in producer price momentum, we believe it is more likely that core inflation will also gradually lose momentum in the coming months. Due to the recent sharp correction on the global commodity markets, the probability of a general slowdown in inflation momentum in the fall has increased. For Europe, however, the tight situation in electricity and gas supply remains a significant uncertainty factor that could delay a decline in inflation rates. Overall, we expect inflation to reach 7.6% in 2022. Due to the current correction in global commodity prices, we forecast inflation to fall to 3.9% in 2023. EZ - Record inflation is a risk factor for 2Q GDP Next week (July 29), a first flash estimate of GDP growth in 2Q22 will also be published. In 1Q, the Eurozone grew surprisingly strongly at 0.5% q/q, due to special effects. However, high inflation already weighed on consumption in 1Q, which contracted by 0.7% q/q. The further sharp rise in inflation in 2Q to an average of 8% represents a significant downside risk for private consumption and thus for the overall economy in the Eurozone. We therefore expect the economy to stagnate roughly in 2Q. Falling inflation momentum would be helpful for an improvement in the economic outlook. In addition, a decisive factor for the outlook for private consumption is the question of how quickly and to what extent employees will be compensated for the record inflation levels via wage increases. Given the stronger than expected growth in 1Q, we expect GDP to grow 2.7% in 2022, despite the challenging environment. In 2023, growth momentum should drop further to 1.8%. IT – New elections in autumn This week, President Mattarella accepted the resignation of Prime Minister Mario Draghi and dissolved parliament. New elections are now expected between mid-September and early October.  Download The Full Week Ahead

Next week, the FOMC, the Fed's monetary policy-making body, meets. We expect a 75 basis point (bp) hike in key interest rates, in line with the market. At the last meeting, Fed Chairman Powell announced that there would be a decision on a 50bp or 75bp hike in July. The crucial economic data released since then clearly favor the stronger hike. The inflation rate for June showed a further increase, reaching 9.1%. Energy and food prices are the decisive factors for the continuous increases that have been seen for months. In the remaining areas (core inflation), the inflation rate has declined in recent months, but only very slowly. Although sharp price increases from the previous year have dropped out of the calculation, at the same time, current inflationary pressures have been high since last fall and show no signs of abating. The labor market data for June published earlier showed a continued robust development. The number of newly created jobs has been stable at a high level for months. The unemployment rate has remained near record lows. Finally, retail sales showed solid growth in private consumer demand. Notably, the sharp rise in inflation also fueled short-term expectations of a 100bp rate hike. However, after a number of FOMC members rejected such a rate hike, the likelihood of this happening is low. The most exciting thing about the upcoming FOMC meeting should therefore be the outlook. However, we do not expect any changes compared to June. Fed Chairman Powell should also put a rate hike of 50bp or 75bp on the agenda for the September meeting. Inflation developments will remain the key determinant. The further development is very uncertain, as it will be determined, among other things, by supply bottlenecks depending on the conflict with Russia and the lockdowns in China. In general, however, the economy in the US and globally has started to cool down, which should counter inflationary pressure. Commodity prices, for example, have already fallen significantly. We expect to see a slight reduction in the inflation rate by the September meeting. Furthermore, based on the latest survey of FOMC members in June, next week's rate hike will bring policy rates very close to a neutral level, which should allow the Fed to proceed somewhat more slowly, so that in total we expect a rate hike of 50bp in September. EZ - Inflation could rise slightly again Next week (July 29), a first flash estimate of inflation for July will be published. In June, inflation rose further to 8.6% y/y, mainly due to increasing momentum in food and energy prices. By contrast, core inflation stabilized at around 3.7% y/y. As a result of the development of food, electricity and gas prices, there are also upside risks to the inflation rate in July. By contrast, the slight drop in the price of gasoline and diesel in some countries should have a dampening effect on inflation. In view of the recent decline in producer price momentum, we believe it is more likely that core inflation will also gradually lose momentum in the coming months. Due to the recent sharp correction on the global commodity markets, the probability of a general slowdown in inflation momentum in the fall has increased. For Europe, however, the tight situation in electricity and gas supply remains a significant uncertainty factor that could delay a decline in inflation rates. Overall, we expect inflation to reach 7.6% in 2022. Due to the current correction in global commodity prices, we forecast inflation to fall to 3.9% in 2023. EZ - Record inflation is a risk factor for 2Q GDP Next week (July 29), a first flash estimate of GDP growth in 2Q22 will also be published. In 1Q, the Eurozone grew surprisingly strongly at 0.5% q/q, due to special effects. However, high inflation already weighed on consumption in 1Q, which contracted by 0.7% q/q. The further sharp rise in inflation in 2Q to an average of 8% represents a significant downside risk for private consumption and thus for the overall economy in the Eurozone. We therefore expect the economy to stagnate roughly in 2Q. Falling inflation momentum would be helpful for an improvement in the economic outlook. In addition, a decisive factor for the outlook for private consumption is the question of how quickly and to what extent employees will be compensated for the record inflation levels via wage increases. Given the stronger than expected growth in 1Q, we expect GDP to grow 2.7% in 2022, despite the challenging environment. In 2023, growth momentum should drop further to 1.8%. IT – New elections in autumn This week, President Mattarella accepted the resignation of Prime Minister Mario Draghi and dissolved parliament. New elections are now expected between mid-September and early October.  Download The Full Week Ahead

Next week, the FOMC, the Fed's monetary policy-making body, meets. We expect a 75 basis point (bp) hike in key interest rates, in line with the market. At the last meeting, Fed Chairman Powell announced that there would be a decision on a 50bp or 75bp hike in July. The crucial economic data released since then clearly favor the stronger hike. The inflation rate for June showed a further increase, reaching 9.1%. Energy and food prices are the decisive factors for the continuous increases that have been seen for months. In the remaining areas (core inflation), the inflation rate has declined in recent months, but only very slowly. Although sharp price increases from the previous year have dropped out of the calculation, at the same time, current inflationary pressures have been high since last fall and show no signs of abating. The labor market data for June published earlier showed a continued robust development. The number of newly created jobs has been stable at a high level for months. The unemployment rate has remained near record lows. Finally, retail sales showed solid growth in private consumer demand. Notably, the sharp rise in inflation also fueled short-term expectations of a 100bp rate hike. However, after a number of FOMC members rejected such a rate hike, the likelihood of this happening is low. The most exciting thing about the upcoming FOMC meeting should therefore be the outlook. However, we do not expect any changes compared to June. Fed Chairman Powell should also put a rate hike of 50bp or 75bp on the agenda for the September meeting. Inflation developments will remain the key determinant. The further development is very uncertain, as it will be determined, among other things, by supply bottlenecks depending on the conflict with Russia and the lockdowns in China. In general, however, the economy in the US and globally has started to cool down, which should counter inflationary pressure. Commodity prices, for example, have already fallen significantly. We expect to see a slight reduction in the inflation rate by the September meeting. Furthermore, based on the latest survey of FOMC members in June, next week's rate hike will bring policy rates very close to a neutral level, which should allow the Fed to proceed somewhat more slowly, so that in total we expect a rate hike of 50bp in September. EZ - Inflation could rise slightly again Next week (July 29), a first flash estimate of inflation for July will be published. In June, inflation rose further to 8.6% y/y, mainly due to increasing momentum in food and energy prices. By contrast, core inflation stabilized at around 3.7% y/y. As a result of the development of food, electricity and gas prices, there are also upside risks to the inflation rate in July. By contrast, the slight drop in the price of gasoline and diesel in some countries should have a dampening effect on inflation. In view of the recent decline in producer price momentum, we believe it is more likely that core inflation will also gradually lose momentum in the coming months. Due to the recent sharp correction on the global commodity markets, the probability of a general slowdown in inflation momentum in the fall has increased. For Europe, however, the tight situation in electricity and gas supply remains a significant uncertainty factor that could delay a decline in inflation rates. Overall, we expect inflation to reach 7.6% in 2022. Due to the current correction in global commodity prices, we forecast inflation to fall to 3.9% in 2023. EZ - Record inflation is a risk factor for 2Q GDP Next week (July 29), a first flash estimate of GDP growth in 2Q22 will also be published. In 1Q, the Eurozone grew surprisingly strongly at 0.5% q/q, due to special effects. However, high inflation already weighed on consumption in 1Q, which contracted by 0.7% q/q. The further sharp rise in inflation in 2Q to an average of 8% represents a significant downside risk for private consumption and thus for the overall economy in the Eurozone. We therefore expect the economy to stagnate roughly in 2Q. Falling inflation momentum would be helpful for an improvement in the economic outlook. In addition, a decisive factor for the outlook for private consumption is the question of how quickly and to what extent employees will be compensated for the record inflation levels via wage increases. Given the stronger than expected growth in 1Q, we expect GDP to grow 2.7% in 2022, despite the challenging environment. In 2023, growth momentum should drop further to 1.8%. IT – New elections in autumn This week, President Mattarella accepted the resignation of Prime Minister Mario Draghi and dissolved parliament. New elections are now expected between mid-September and early October.  Download The Full Week Ahead

Eurozone PMI data is off to a bad start with weak French data, which could take a further toll on EUR sentiment. With the ECB meeting out of the way, the focus can go back to fundamentals, Italian elections in September, the energy crisis and recession risk.  Germany's PMIs are even worse than the French data. Both manufacturing and services printed at 49.2, well below expectations and both in contractionary territory. The composite flash is a dismal 48.0. These gnarly PMI readouts could be an open window to sell the Euro on a policy mistake premise.  Though the knee-jerk spike has moderated somewhat, bunds had a more substantial initial reaction to the German PMI print than the French one. The futures gained roughly half a point on each bad print, with the German 10y yield down 12bp on the day.  USDCHF topped against the .9730/40 resistance level several times on Thursday; since then, the softer US data prints and, as a result, lower US yields have been weighing on the USD. The widening of peripheral spreads post ECB has been weighing on EURCHF, where the market has been taking back some shorts recently and now seems eager to re-instate