Post by Barclays Investment Bank

Global economic forces to 👀 for the week of 29 June, according to our Research team 👇 The key commodities — oil and chips — are sending mixed economic signals: falling oil prices reduce inflation fears and support activity; while soaring chip prices confirm robust AI investment demand but also add to inflation pressures. This week's focus: US employment, euro area inflation and ECB’s Sintra Forum. ◾ US: Incoming data continue to fuel a reacceleration narrative, but our Research team interpret much of this as a mirage. Though GDP and PCE headlines look firm, underlying demand and income fundamentals look softer. Our US economics team maintains their call that the Fed remains on indefinite hold, with risks skewed toward hikes. ◾ Euro Area: The decline in oil prices should support a recovery in economic activity and remove the tail risk of a sharp deterioration in the inflation outlook, but our Euro area economists note pipeline price pressures will not disappear. They still expect the ECB to raise rates at the September meeting. ◾ UK: Politics dominated data, with the prime minister resigning and Andy Burnham looking increasingly likely to replace him by mid-July. MPC members continue to provide divergent views on the outlook for rates, while PMI data imply downside risk to our UK economist’s Q2 GDP forecast, and inflation expectations slowed again. ◾ Japan: A net increase in fiscal burden from the public-private investment plan is likely limited relative to headlines, and some investments could be included as part of future defence spending increases. Bank of Japan communications support our Japan Research team’s rate hike forecasts, with risks potentially skewing hawkish if JPY weakness persists in the face of further intervention. https://lnkd.in/ej3Zv4qH