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Oil boosted on expected drag on Iranian supply

  
Analysis, Crude

Tricky negotiations

Oil is supported on demand recovery and low inventories. The sixth round of talks to restore the nuclear deal that would lift US sanctions still sees significant disagreement. If a deal is done, then expect oil weakness in the near term, However, for now, failed talks should help the oil complex stay supported despite the wider commodity rout on a hawkish Fed shift.

Tricky negotiations

Economic calendar due from Asia today – China monthly loan rate setting

  
  Analysis

2301 GMT from the UK is the Rightmove house price indicator for June

  • prior +1.8% m/m
  • not a market mover

0130 GMT China Loan Prime Rate monthly setting, expected to be unchanged again, this would be the 14th consecutive month of steady LPRs.

  • 1 year LPR expected 3.85%, prior 3.85%
  • 5 year LPR expected 4.65%, prior 4.65%
  • The LPR is set in reference to the rate on the PBOC’s medium-term lending facility (MLF). Its a lending reference rate set monthly by 18 banks.

What’s on the US economic calendar next week: PCE data and plenty of Fedspeak

  
  Analysis

Fed speak will be one of the highlights

Fed speak will be one of the highlightsThe Fed dominated the past week and it will likely be more of the same in the days ahead with a heavy slate of speakers scheduled to offer their thoughts on the stance of monetary policy.
Monday:
  • Bullard
  • Kaplan
  • Williams
Tuesday:
  • Mester
  • Daly
  • Powell testifies in Congress
Wednesday:
  • Bowman
  • Bostic
  • Rosengren
Thursday:
  • Bostic
  • Harker
  • Williams
  • Bullard
  • Kaplan
  • Fed bank stress tests
Friday:
  • Mester
  • Rosengren
  • Williams
Expect a handful of media appearances as well. If there’s a message the Federal Reserve wants to send, they will certainly have an opportunity.
The economic data calendar also has some highlights but the week will start quietly with nothing market moving scheduled for Monday. It picks up from there.
Tuesday:
  • Existing home sales
  • Richmond Fed
Wednesday:
  • Markit manufacturing and services prelim
  • New home sales
Thursday:
  • Trade balance
  • Durable goods orders
  • Q1 GDP (third look)
  • Initial jobless claims
Friday:
  • PCE
  • UMich sentiment
For the PCE report, CIBC forecasts an above-consensus reading of +0.6% on personal spending (+0.3% exp) and is in-line on the +3.5% y/y core inflation number.
“Although households have ample savings as a result of past fiscal stimulus to spend, labor shortages and supply chain issues are proving to be a headwind to activity, while quickly rising prices in some areas of the economy could pose a threat to future demand. The escalation in prices has been expected by the Fed and it will look through the acceleration as transitory and remain focused on the recovery in the labor market.”
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