US GDP, quarterly results and the decisions of the Fed and the ECB: the markets expect a rise of 25 basis points

MILAN – Week full of ideas for the financial markets, among all the decisions of the Federal Reserve and the ECB on interest rates scheduled for Wednesday and Thursday.

The PMI indices of Japan, France, Germany, the EU, the United Kingdom and the United States will open the ball on Monday 24 July, to be followed the day after by the German Ifo index, house prices and the indices of the Richmond Fed. This is followed by US crude stocks and the Fed’s decision on rates on Wednesday 26, followed the day after by the ECB which will release the results of the stress tests on the banks on Friday. In both cases, the increase expected by analysts is 25 basis points.

Expectations for the ECB

Deutsche Bank analysts, in a report on Friday, said they expected a 25 basis point hike to 3.75% for the deposit rate and that a further hike to 4% cannot be ruled out for the September meeting. For the experts of the German bank, the ECB “does not want September to mark a turning point in the monetary cycle. The ECB wants markets to perceive its steadfastness in bringing inflation back to target and its willingness to stay “higher and longer” if necessary.

According to Barclays, on the other hand, in addition to raising rates by 25 basis points (with the main refinancing at 4.25%, therefore), the ECB will leave the PEPP indication unchanged, according to which “maturing securities will be reinvested in a flexible manner at least until the end of 2024” and will continue with the current plan of “not reinvesting maturing App securities”. Looking at the horizon, for Barclays the prospect is to maintain the deposit rate at 3.75% for next year and then proceed with a cut of one hundred basis points in the second half of 2024.

Focus on US GDP and quarterly reports

Among the incoming data there is also the US quarterly GDP, to close on Friday 28 with the Japanese central bank’s rate decision, the second reading of German inflation, the French GDP and the indexes of the University of Michigan. All seasoned with an avalanche of quarterly and half-yearly reports, starting with the Italian companies Essilux, Poste, Unicredit, Mediobanca, Snam, Intesa and Eni.

The PMI indices from Japan, France, Germany, the EU, the United Kingdom and the USA, where the Chicago Fed index is being released, are expected on Monday 24th. The quarterly reports of Ryanair, Philips and Sogefi are coming.

The Ifo from Germany is on the agenda for Tuesday 25th. House prices, consumer confidence and the University of Richmond indices are arriving from the United States. Waiting for the quarterly reports from Microsoft, Lvmh, Essilux, and Poste.

Wednesday 26 is the day of the Fed, which will decide on rates in the evening, after a series of indicators ranging from home sales to crude oil inventories. The expected upside is 25 basis points, barring surprises. Expected accounts of Unicredit, Saipem, Italgas, Edison, Enel, Stellantis, Deutsche Bank, Moncler, Campari, Inwit, Hera and Fincantieri.

On Thursday 27th the decision on rates by the Hong Kong Monetary Authority, currently at 5.5%, precedes that of the ECB by a few hours, with an expected increase of 0.25%. The Italian and US confidence indicators include applications for unemployment benefits, durable goods orders, quarterly GDP and inventories, together with the Kansas City Fed indices and the Fed’s financial statements. The quarterly reports from Amazon, Nestlé, L’Oréal, Roche, Shell, TotalEnergies, Intel, Mercedes, Volkswagen, BNP, Kering, Stm, Barclays, Macquarie, ArcelorMittal, Snam, Terna are awaited , Renault, Prysmian, Mediobanca, Vivendi, Amplifon, Diasorin, Pirelli, Brembo, Banca Generali, Azimut, Webuild, Maire Tecnimont and Rai Way.

On Friday 28 July inflation and the decision on rates by the Central Bank arrive from Japan, the rate of which is currently stuck at -0.1%. The second inflation reading for July is expected from Germany, France and Spain. Industrial sales, French GDP and consumer and business confidence in the EU are arriving from Italy. The ECB will communicate the results of the stress tests on European and Italian banks. The second reading on inflation is expected from the USA, with the indices of the main spending prices, followed by the indices of the University of Michigan. The accounts of Hermes, Eni, Intesa, Cnh Industrial, Leonardo, A2a, Autogrill, Piaggio, Italmobiliare and BasicNet are on the way.