The Week Ahead - CPI, Bank Indonesia, PMIs, corporate earnings

Inflation data: A worker prepares a crate of chillies at a wet market in Selayang. The Statistics Department is due to announce inflation data for June 2021 on Friday. — Bloomberg

CPI and LI

CONSUMER price index (CPI) is the focus in this four-day week. The Statistics Department is due to announce inflation data for June 2021 and leading index (LI) for May 2021 on Friday.

The CPI increased by 4.4% in May 2021 to 123.1, against 117.9 in the same month of the preceding year.

Inflation rate is expected to be 5.4% by the end of this quarter, according to Trading Economics’ global macro models and analysts expectations.

Meanwhile, Bank Negara will announce its international reserves as at July 15 on Friday.

The international reserves of Bank Negara amounted to US$111.1bil as at June.

The reserves position is sufficient to finance 8.2 months of retained imports and is 1.1 times total short-term external debt.

Bursa Malaysia and its subsidiaries will be closed tomorrow, in conjunction with Hari Raya Haji.

Bank Indonesia decision

A poll of five analysts by Bloomberg expects no change to Bank Indonesia’s (BI) 0.50% rate.

Going forward, UOB is of the view that BI will keep its accommodative monetary policy via other macro prudential and liquidity-supporting measures to effectively transmit the cumulative 150-basis-point reduction of the benchmark interest rate into the economy.

UOB keeps its BI rate forecast steady at 3.5% for the rest of the year.

Flash PMIs

FLASH purchasing managers’ index (PMI) surveys this week will offer a first look into July’s economic conditions across the United States, eurozone, the United Kingdom and Australia.

According to IHS Markit, June PMI surveys alluded to the possibility of global growth having peaked while indicating worsening divergences between the developed and emerging markets amid the spread of the Delta variant. IHS said the PMI price indices would also give clues as to the transitory nature of the inflation uptick.

China’s LPR

CHINA will update its one-year and five-year loan prime rate (LPR) fixings tomorrow.

According to a Bloomberg poll of 16 analysts, both the one-year LPR and five-year LPR are expected to be fixed unchanged at 3.85% and 4.65%, respectively.

The People’s Bank of China unexpectedly cut banks’ reserve requirement ratio by 50 basis points effective July 15.

UOB Global Economics and Markets Research keeps its forecast for the benchmark one-year LPR and the five-year and above LPR, expecting them to stay unchanged for the rest of the year.

Corporate earnings season

SOME 80 S&P 500 companies are among more than 450 US companies expected to announce their financial results this week.

They include Netflix, IBM, Baker Hughes Co, Coca-Cola, Johnson & Johnson and Halliburton.

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