Highlights include Trade talks and deadlines, Fed, BoJ, BoC, US NFP, Mfg PMI, PCE, QRA, EZ CPI & GDP and Aussie CPI
Newsquawk Week Ahead: Highlights 28th July-1st August 2025
MON: US Dallas Fed (Jul), German GfK (Aug)
TUE: US Consumer Confidence (Jul), JOLTS (Jun)
WED: FOMC & BoC Policy Announcements; ECB Wage Tracker, Australian CPI (Jun/Q2), German Retail Sales (Jun), Swiss KOF (Jul), EZ Flash Prelim. GDP (Q2), US ADP (Jul), GDP Advance (Q2), PCE Advance (Q2), Pending Home Sales (Jun)
THU: BoJ & SARB Policy Announcements; Chinese NBS PMIs (Jul), Australian Retail Sales (Jun), Export/Import Prices (Q2), German Unemployment (Jul), French & German Flash CPI (Jul), US PCE (Jun), Weekly Claims, Canadian GDP (May)
FRI: EZ Manufacturing PMI Finals (Jul), EZ CPI (Jul), US Jobs Report (Jul), ISM Manufacturing PMI (Jul), University ofb vMichigan Survey (Jul), Swiss holiday, US Tariff Deadline
US-CHINA TRADE TALKS (MON/TUE): Chinese Vice Premier He Lifeng will lead talks with US Treasury Secretary Bessent in Stockholm on Monday and Tuesday to seek an extension of the 90‑day US–China tariff truce that expires August 12th. Since the Geneva and London meetings earlier this year, the truce has lowered triple‑digit duties; without a deal, tariffs would revert to 145% on US imports and 125% on Chinese goods. Bessent, who said overnight that trade with China is in a “very good place,” wants Beijing to curb excess manufacturing, boost consumer demand and discuss Chinese purchases of sanctioned Russian oil. In earlier talks, China agreed to lift export bans on rare earths and magnets while the US restarted shipments of semiconductor design software and aircraft parts. Beijing has signalled cooperation by suspending an antitrust probe into DuPont China earlier this week and emphasising “mutual respect and win‑win cooperation”. Bessent earlier this week, suggested they could do a rolling 90-day deadline when asked about a deadline with China – such an outcome will likely boost sentiment, allowing more time for talks with no escalations.
QUARTERLY FINANCING ESTIMATES/REFUNDING (MON/WED) : The Quarterly Financing estimates will be released on Monday at 20:00 BST / 15:00 EDT. The prior financing estimates showed that the Treasury expects to borrow USD 554bln in privately-held net marketable debt during the July-September 2025 quarter, assuming an end-of-September cash balance of USD 850bln. This compares to Q2’s (April-June) USD 514bln expected. The Quarterly Refunding will be announced on Wednesday at 13:30BST/08:30 EDT. The prior guidance was left unchanged to suggest the “Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters.”. As always, any change to this would be key, but Wells Fargo expects this to be left unchanged. Given the distaste for the current high long-end rates from the Trump administration, Bessent has previously said it makes no sense to term out the debt at these rate levels. Instead, the Treasury has been boosting bill issuance to cover funding needs in recent weeks. Wells Fargo expects bill supply to continue to ramp up in the near term, projecting net T-bill issuance of USD 475bln in Q3, USD 142bln in Q4 and USD 416bln in Q1-26. The desk also estimates T-bills as a share of the Treasury market will climb to 22.5% by year-end 2027 vs 21.9% by the end of 2024. Looking ahead, Wells Fargo’s new base case is that coupon auction size increases will come in February 2027.
FOMC ANNOUNCEMENT (WED): The consensus looks for the FOMC to hold rates at between 4.25-4.50% on July 30th, an outcome predicted by all 105 economists surveyed by Reuters. Some policymakers, including Governors Waller and Bowman, have advocated for a rate cut (the former cited evidence of labour market weakening, and argued that the Fed should cut now instead of waiting), and that raises the possibility of some dissent at the meeting. Analysts at Morgan Stanley look for both to dissent at the meeting, favouring a 25bps rate reduction. Other policymakers have remained cautious and data-dependent in the face of potential inflation linked to tariffs, as well as political pressure from US President Trump to reduce rates. Ahead, the majority of economists surveyed see possible rate cuts in September, though expectations for cuts this year have slightly diminished. Most expect one or two cuts in 2025. Factors that will influence the Fed’s decision-making include trade uncertainty, inflation risks from tariffs and increased fiscal spending; additionally, the central bank may make efforts to assert its independence amid increasing political interference. At the post-meeting press conference, Chair Powell will likely be heavily quizzed on his role; President Trump has already suggested that he will be nominating a new Fed Chair before Powell’s term expires in May 2026, though has seemingly backed away from the idea of firing him before it ends. Leading candidates to replace Powell are said to include former Fed Governor Kevin Warsh (who recently heavily criticised the Fed, and argued that rates should be lower), Governor Waller, as well as White House Advisor Hasset and Treasury Secretary Bessent. Powell will also be asked about whether he intends to serve his term as Governor after his term as Chair expires — traditionally, Fed Chairs have stepped down from the role after the term as Chair expires; however, some suggest that Powell may wish to serve his remaining Governor term in order to assert the central bank’sindependence. Morgan Stanley expects Powell’s message to be in line with a ‘wait-and-see’ approach, emphasising that monetary policy is ‘well positioned’ to see how the economy evolves. It says that “it’s a long way to September. The Fed needs more time to determine how the economy is evolving versus its goals.” The bank itself sees the US economy will be further away from the Fed’s price stability mandate than full employment and expects no rate cuts this year, in contrast to the consensus view, where money markets are pricing in a decent chance of two cuts this year.
US GDP (WED): The advance reading of GDP in Q2 is expected to show growth of 2.5% (from the prior -0.5%), according toReuters. At the time of writing, the Atlanta Fedʼs GDPnow tracking estimate for the quarter is modelling growth of 2.4%. In June (end of Q2), S&P Globalʼs PMI data suggested that the US service sector reported sustained growth, and viewed alongside improvement in manufacturing growth, indicates that the economy grew at a reasonable annualised rate in Q2, with momentum having improved following Aprilʼs lull. That said, S&P Global said it was “seeing some worrying signs of weakness below the headline numbers,” and points out exports and falling activity among consumer-facing service providers, which has curbed the overall pace of economic expansion. “Concerns over government policies have meanwhile created uncertainty and dampened spending on services more broadly, while also ensuring confidence in the outlook remains subdued compared to the optimism seen at the start of the year.” The July PMI report noted the Q2 data was consistent with a 1.3% annualised growth rate.
AUSTRALIAN CPI (WED): Aussie CPI for Q2 is expected at 0.8% Q/Q (prev. 0.9%), with the Trimmed Mean forecast unchanged at 0.7% Q/Q. Analysts at Westpac also pencil in a 0.9% Q/Q print for headline CPI, noting upside contributions from rents, electricity, garments, and fruit & vegetables, while falling fuel and household gas provide partial offsets. Despite Mayʼs Monthly CPI Indicator falling –0.4%—larger than expected—Westpacʼs review of the data led them to reaffirm their 0.9% quarterly call, albeit with recognised downside risks. For core inflation, Westpacʼs nearcast model for the Trimmed Mean sits at 0.66%, implying a greater likelihood of a 0.6% than a 0.8% print, versus the RBAʼs 0.55% forecast. The annual Trimmed Mean is seen easing to 2.7% Y/Y (prev. 2.9%), still slightly above the RBAʼs implied annual target of +2.6%. Markets currently price an 86% chance of a 25bps cut following the hold in July, with above 57bps of cuts currently priced in till year-end.
EZ Q2 GDP (WED): Expectations are for Q2 Q/Q growth to come in flat vs. the Q1 expansion of 0.6%. The Y/Y rate is expected to slow to 1.2% from 1.6%. As a reminder, the Q1 release showed Q/Q growth of 0.4% vs. the Q4 2024 outturn of 0.2%. However, the uptick in growth was largely attributed to front-loading of purchases in the US ahead of expected tariff announcements from the Trump administration. This time around, analysts at Investec are of the view that Q1ʼs buoyant performance is unlikely to persist into Q2. The desk holds a below-consensus view of -0.3% Q/Q, stating that “monthly data for April and May have already pointed to some payback”. Adding that, as with the Q1 release, the Q2 report will be subject to trade-related distortions. As such, the expected soft outturn is unlikely to represent the “start of a period of persistent weakness” – the desk looks for a return to growth in Q3 and a gradual strengthening thereafter. From a policy perspective, a soft print will likely be largely overlooked given the aforementioned trade distortions and with greater focus on the outcome of EU-US trade talks ahead of the August 1st negotiation deadline.
BOC ANNOUNCEMENT (WED): The BoC is expected to leave rates unchanged at the upcoming meeting, with the BoC likely to leave out forward guidance again given uncertainties to the economy. The Monetary Policy report will be eyed to see how the bank expects Trump’s tariffs to impact the Canadian economy based on the current trade environment. The policy rate of 2.75% remains at the midpoint of the BoC’s nominal neutral rate estimate (between 2.25-3.25%). This limits room for more rate cuts, unless the economy were to deteriorate in the face of trade tensions. Macklem, in June, had suggested that rate cuts would be needed if the effects of tariffs and uncertainty continued to spread through the economy and cost pressures were contained. However, recent data saw inflation remain towards the top-end of the BoC’s target, while the labour market situation improved – dimming the prospects for near-term rate cuts. Money markets are only pricing in 14bps of further easing by year-end, implying a 56% probability of one more rate cut this year, but any deterioration in trade relations may see a rate cut priced with more certainty and vice versa, depending on how the economy unfolds. The recent outlook surveys showed signs of optimism and improvement; however, despite the ongoing uncertainties, with the worst-case scenarios from Q1 less likely to occur, while business expectations on short-term inflation have returned to levels seen at the end of 2024. However, the consumer survey declined as spending intentions weakened further due to the persistent threats of tariffs and related uncertainty. Consumersʼ short-term inflation expectations have changed little since increasing markedly in Q1 2025.
US PCE (THU): Both headline and core PCE are expected to rise by +0.3% M/M in June (from 0.1% M/M and 0.2% M/M, respectively, in May). Writing after the June CPI and PPI reports, Pantheon Macroeconomics forecast that headline PCE will have increased by +0.32% M/M, while core PCE will have risen by 0.30% M/M. “This would represent an acceleration relative to May, with the majority of the underlying components showing accelerated prints, and in particular, we expect a drag from energy prices to be offset by firming in food inflation and the core.” Its economists say that the soft trajectory of monthly core inflation going into June is poised for further firming in the coming months. “Although airfares and lodging prices remain on downward trajectories, we doubt that this can be a sustained source of disinflation in the coming months,” adding that “meanwhile, financial services prices have now firmed following the post-Liberation Day swoon.” Crucially, Pantheon expects cost-push pressures from tariffs to intensify in the coming months, which should push core goods PCE higher. The Fedʼs June forecasts estimate a rise in headline PCE inflation to 3.0% this year, while the core rate is seen rising to 3.1%, before cooling in 2026. Most Fed officials, except for Governors Waller and Bowman, have taken a cautious line on rate reductions, arguing that the tariff impact on inflation remains uncertain, but has the potential to push up consumer prices. Waller, however, has been arguing for rate cuts, based on evidence of a weakening in the labour market.
BOJ ANNOUNCEMENT (THU): The Bank of Japan will hold a two-day policy on July 30th-31st, where the central bank is expected to maintain its short-term interest rate at 0.50%. A recent Reuters poll showed 60 out of 72 economists surveyed forecast the BoJ to refrain from any rate adjustments for the next two meetings through to September, while money market rates are pricing a 99% likelihood the central bank keeps rates unchanged. The BoJ will also release its latest Outlook Report containing board members’ median forecasts for Real GDP and Core CPI. The Bank of Japan have refrained from any rate adjustments since it last hiked rates in January, although it announced at the prior meeting in June it is to reduce the amount of monthly JGB purchases by about JPY 200bln each quarter from April 2026 onward. It noted this decision was made to improve the functioning of the JGB markets in a manner that supports stability in the markets. Furthermore, Governor Ueda stated following the meeting that they will continue to hike rates if the economy and prices improve, with the central bank to be guided from the viewpoint of sustainably and stably meeting the price target. He also stated that a further hike is dependent on the likelihood of attaining the BoJ’s outlook, and the timing of such a move is dependent on the certainty of the outlook, but added it is not appropriate to comment on near-term hike possibilities, and a rate hike decision would need to be based on lots of data and considerations. Since then, there have been recent major developments concerning Japan, which policymakers would need to consider when deciding on rates: 1) The upper house election, where the ruling coalition suffered a scathing loss and failed to achieve a majority. This raises political uncertainty and pressure for the government to listen to opposition partiesʼ calls for fiscal loosening, although PM Ishiba is seemingly looking to remain in position and denies reports of a possible resignation. 2) Trade developments have provided optimism after the US and Japan reached a trade deal involving a 15% tariff on Japanese exports to the US, which is lower than the previous threat of a 25% tariff rate. Nonetheless, these developments are unlikely to spur any immediate policy reaction from the central bank and a source report via Bloomberg noted the BoJ sees little impact from the election on the rate stance but sees upward price risks if there is large fiscal loosening and was watching for trade talk impact before any hikes. Further sources (via Bloomberg) on Friday suggested
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