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Weekly Economic & Financial Commentary: Fed to Hike Next Week, but What Then?


United States: Rate Sensitive Sectors Struggle as E-commerce Boosts Retail Sales

  • The FOMC’s balancing act became more daunting this week. Its rate hikes thus far still have not fully repressed consumer spending, but there are signs of fallout in other rate-sensitive parts of the economy, such as the industrial sector and housing. Is the economy in good shape or bad? The answer is both.
  • Next week: New Home Sales (Wed), GDP (Thu), Personal Income & Spending (Fri)

International: China’s Economy Lacking Momentum

  • China’s Q2 GDP figures, along with activity data for June, confirmed the economy is losing momentum. Q2 GDP rose 0.8% quarter-over-quarter, well down from 2.2% in Q1. June activity data were mixed, as retail sales slowed more than expected, but industrial output unexpectedly firmed. Still, China’s central bank appears on course to ease monetary policy further in Q3, while waning momentum also suggests downside risk to our 2023 growth forecast for China.
  • Next week: Australia CPI (Wed.), ECB Rate Announcement (Thu.), BoJ Policy Announcement (Fri.)

Interest Rate Watch: Fed to Hike Next Week, but What Then?

  • The FOMC’s decision to leave policy unchanged in June was delivered with a hawkish message. We expect another 25 bps hike at next week’s meeting, bringing the target range to 5.25%-5.50%. While markets doubt the prospect for further tightening beyond July, we look for the post-meeting statement and press conference to signal further hikes remain possible.

Credit Market Insights: Consumers Increasingly Facing Credit Application Rejections

  • The New York Fed’s Survey of Consumer Expectations (SCE) Credit Access Survey demonstrated that consumers faced steep hurdles when making big-ticket purchases. Rejections for all kinds of credit have increased in light of the uncertainty surrounding the near-term economic outlook.

Topic of the Week: Breaking Down the 2023 FIFA Women’s World Cup

  • World Cup season is not over yet as the women’s tournament kicked off this week in Australia and New Zealand. The 2023 FIFA Women’s World Cup gives us another opportunity to apply economic analysis toward picking a champion. We also take the chance to dive into the global gender pay gap.

Full report here.

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