Markets turn to U.S. inflation data and Fed testimony
WuBlockchain’s weekly macro note said this week’s focus is on U.S. June CPI, June PPI, and Federal Reserve events tied to the central bank’s semiannual monetary policy report.
On July 14, the U.S. June unadjusted CPI annual rate is due at 20:30. Fed Chair Kevin Warsh is then scheduled to appear before the House Financial Services Committee at 22:00 for a hearing on the Fed’s semiannual monetary policy report. On July 15, the U.S. June PPI annual rate is set for 20:30, followed by Warsh’s 22:00 appearance before the Senate Committee on Banking, Housing, and Urban Affairs.
On July 16, the Fed will release the Beige Book at 02:00, and U.S. initial jobless claims for the week ended July 11 are scheduled for 20:30. On July 17, Fed Vice Chair Jefferson is due to speak on the economy and monetary policy. Later that day, the preliminary U.S. one-year inflation expectations reading and the preliminary University of Michigan consumer sentiment index for July are both scheduled for 22:00.
Last week: Fed framework review begins, minutes show disagreement
Looking back, the summary said the Fed set up five separate working groups to reassess its monetary policy framework. The review covers communications, balance sheet policy, data systems, AI’s effect on productivity and employment, and the inflation framework.
The members listed include a16z co-founder Marc Andreessen, Nobel Prize winner Thomas Sargent, Harvard professor Greg Mankiw, and Anthropic researcher Charles Jones. Fed Chair Kevin Warsh said the U.S. economy is undergoing major change and that the Fed needs to revisit its analytical tools and policy methods to better achieve price stability and maximum employment.
Fed meeting minutes released during the week showed internal divisions, with the outlook for inflation and interest rates still unclear.
Jobless claims, ECB inflation concerns, and China’s CPI
In the U.S., initial jobless claims for the week ended July 4 came in at 215,000, versus an expectation of 218,000. The prior reading was revised from 215,000 to 217,000.
In Europe, the European Central Bank’s June meeting account showed a shared view that upside inflation risks remain, while pricing for as many as three rate hikes this year kept building. In China, June CPI rose 1% year over year, below expectations and lower than the previous month.
Strait of Hormuz tensions lifted shipping and energy risks
WuBlockchain also said last week saw renewed heavy fighting between the U.S. and Iran around the Strait of Hormuz. Iran attacked multiple merchant ships and said it was closing the strait. The U.S. then carried out repeated airstrikes on Iranian missile, drone, naval, and communications facilities. Iran responded with missile and drone attacks on U.S. targets in Qatar, Kuwait, Bahrain, and other Gulf states. Donald Trump said the earlier ceasefire had ended.
According to the summary, the two sides were still in contact through channels including Oman, but the conflict had already spilled over, raising risks for global shipping and energy supply.