November 30, 2022

Halfway to 2022: What to expect as inflation bites?

LQDFXperts Features | Halfway to 2022: What to expect as inflation bites?

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Following large fiscal stimulus programs and accommodative monetary policy, economies slow down from their elevated post-pandemic growth rates. 

The Russia-Ukraine war has exacerbated inflationary pressures and exerted downward pressure on economic growth through a surge in commodity prices.  

The eurozone and UK are both challenged by higher energy prices and potentially curtailed supply.

With investor expectations fluctuating between continued high inflation, few believe the market’s volatility will dissipate soon.

We are seeing higher inflation and slowing growth, indicating that we may be late in the business cycle. The remainder of 2022 will likely bring a substantial growth slow for major developed economies.​

In contrast with the end of 2021, expectations for monetary policy have evolved to indicate a rapid pace of tightening across the Fed, Bank of England, and even some expectation of European Central Bank tightening.

COVID-related lockdowns in China have brought with them renewed challenges for growth. But now, its two largest cities, Beijing and Shanghai, recorded no new local-transmitted COVID infections on Monday, raising hope that economic activity may return to normalcy. Experts expect a rebound in the year’s second half, helped by a combination of fiscal and monetary policy stimulus.

The weekly economic calendar ahead

A raft of upcoming data and events should show how the U.S. economy responds to an aggressive Fed.

Updated first-quarter GDP figures for the US and UK will also come to light this week. 

The start of the new month brings fresh global manufacturing data from the PMIs. After June’s flash PMIs pointed to a weakening factory sector, attention will shift to June’s final global manufacturing PMI data.

Highlights include Tuesday’s June consumer confidence index and the Case-Shiller home price index should show how much-rising mortgage rates are biting. 

The May personal consumption expenditures price index – an inflation indicator watched by the Fed – is due on Thursday.

Key events

Tuesday 28 Jun

Germany GfK Consumer Confidence (Jul)

United States CB Consumer Confidence (Jun)

United States House Price Index (April)

Wednesday 29 Jun

Australia Retail Sales (May)

Eurozone Consumer Confidence (Jun)

Japan Retail Sales (May)

United States GDP (Q1)

Thursday 30 Jun

Canada GDP (April)

China NBS Manufacturing/Non-Manufacturing PMI (Jun)

Eurozone Unemployment (May)

United Kingdom GDP (Q1)

Friday 01 Jul

Hong Kong, Canada Market Holiday

Worldwide Manufacturing PMIs, incl. global PMI* (Jun)

Eurozone CPI (Jun)

United States ISM Manufacturing PMI (Jun)

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*PLEASE NOTE The information above is not investment advice.

Sources: Reuters, Investing, CNN money