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Week Ahead – Market Volatility to Remain Elevated

Global stocks are all over the place as some indexes fall into correction as others continue to extend higher into record territory. The bond market volatility surprised many investors as the growth outlook took a massive hit as the spread of the Delta coronavirus variant showed many countries are still struggling to return to normal.

Asian stocks should have a strong open following the PBOC’s RRR cut. This is quite the pivot by the central bank and it should support the notion that crackdown over tech companies will probably ease. The yuan could be vulnerable following the RRR cut and that should be great news for exports.

The upcoming week is filled with many potential market moving events. A wrath of rate decisions (BOJ, BOC, RBNZ, and CBRT) will continue to show the unbalanced global economic recovery has some banks tapering, others poised for further cuts, and some stuck in wait-and-see mode. Traders will also closely watch three big economic releases: US CPI, China’s Q2 GDP, and US retail sales, which could show some weakness persisting across the world’s two largest economies. The banks will also kickoff earnings season and that should come with a better understanding of how strong is the US consumer. Fed Chair Powell will give his semi-annual Monetary Policy Report to Congress. Since Powell’s testimony will happen after the latest inflation report and fresh concerns about the pace of the global economic recovery, it could have a dovish outcome.



Next week is a jammed pack week with CPI data, key testimony from Fed Chair Powell, and the beginning of earnings season.  It will be a busy week of Fed speak as Quarles, Kashkari, Evans and Williams will all be making the rounds.

Tuesday will be a busy morning with the June inflation report expected to show inflationary pressures ease. The June month over month reading is expected to tick lower to 0.5%, while the year over year headline eases from 5.0% to 4.9%.  Earnings season officially begins with early reports from Pepsico, JPMorgan, Fastenal and Goldman Sachs.  Wall Street will closely listen to what the banks have to say about the US consumer.

On Thursday, Fed Chair Powell will deliver his semi-annual testimony to the Senate Banking Panel.  This could be big because Powell may start to see some easing of pricing pressures and further reasons to become slightly pessimistic to the short-term global growth outlook.  If Powell confirms his conservative, somewhat noncommittal approach to tapering, we could see Treasury yields remain heavy.

The June retail sales reading will draw a lot of attention on Friday given the big miss last month.  Investors will look to see if this trend continues.


Europe’s battle with Covid is, unfortunately, far from over. The World Health Organization has warned that a new wave of Covid in Europe is inevitable, with cases of the Delta variant on the rise.

The resurgence of Covid could have a devastating effect on the summer tourist season. France has warned its citizens against vacationing in Spain in Portugal, and other countries could follow suit with advisories against travelling to certain European countries.

The International Conference on Climate will take place in Venice on Sunday, July 11. ECB President and the Fed’s Quarles will be among the key speakers.

On Monday, eurozone finance minister will meet in Brussels to discuss economic and financial issues affecting the eurozone. US Treasury Secretary Janet Yellen will be in attendance.

The EU Foreign Affairs Council will also meet in Brussels. The agenda will include geopolitical hotspots, including Afghanistan, South Caucasus, Lebanon, Ethiopia, as well as digital technologies. The Council will also hold a working lunch with Israeli foreign minister Lapid.

German Chancellor Merkel will host Ukrainian President Zelenskiy in Berlin. The two leaders will discuss the Nord Stream 2 gas pipeline, which runs between Russia and Germany, as well as the conflict in Ukraine’s Donbas region.

On Tuesday, Germany releases the June CPI report.

On Wednesday, European Commission President Ursula von der Leyen and Commissioner for Budget Johannes Hahn host a press conference in Brussels. European Commission Vice President will discuss an EU digital tax, which the US opposes.

The European Commission will recommend new measures under its Green Deal plan, including expanding the EU’s carbon market. These proposals follow the endorsement of EU’s new Climate Law, which increases the bloc’s 2030 emissions reductions target.

France celebrates Bastille Day, with financial markets to remain open.

The eurozone releases Industrial Production for May.

On Thursday, Germany Chancellor Angela Merkel visits the White House and will meet with President Joe Biden. The agenda will include tensions over the Nord Stream 2 pipeline, which carries natural gas from Russia to Germany.

The eurozone releases CPI YoY readings on Friday, which could slip from 2.0% to 1.9%. The Core CPI YoY reading is expected to remain unchanged at 0.9%.


On Tuesday, Sweden Riksbank Governor Stefan Ingves will join in a panel discussion at a virtual conference in Jerusalem, entitled “Inflation: Dynamics, Expectations, and Targeting.


On Sunday, July 14, Prime Minister Boris Johnson is expected to confirm the decision to end most health restrictions in England, commencing on July 19. The UK has been hit with a surge in cases of the Covid delta variant, but Johnson is keen to reopen the economy.

On Wednesday, the UK releases June CPI YoY. The consensus is 2.3%, vs 2.1% in the May report. The monthly reading is expected to ease from 0.6% to 0.1%.  BOE Deputy Governor David Ramsden speaks at the Strand Group, in an event co-sponsored by King’s Business School.

On Thursday, the UK publishes the and the Unemployment Rate for May and Unemployment Claims for June. Also, BOE member Michael Saunders delivers a speech on the U.K. inflation outlook.

Emerging Markets


Poland will release the June CPI report on Thursday.  The June CPI Core YoY reading is expected to decline from 4.0% to 3.7%.

South Africa

On Tuesday, South Africa will release gold, platinum and mining production for May.


On Tuesday, Turkey releases Industrial Production for May.

Turkey’s central bank will hold a policy meeting on Wednesday, with analysts unanimously expecting the 1-week repo rate to remain steady at 19.00%. The central bank governor has promised to maintain interest rates above inflation until there is a permanent drop in price growth. Last week, the bank reiterated its projection that inflation will ease considerably in Q3 of 2021 and into Q4. The bank noted that the vaccine rollout is going well and has boosted economic activity.

ASIA Pacific


The Hang Seng Index tumbled into bear mark