Tomorrow's Macro Roadmap: New Zealand Inflation Report, UK Jobs, ECB Lending Survey and German ZEW ahead of Thursday's ECB Rate Decision
Macro: The Big Picture
Tuesday's calendar is front-loaded and sits entirely in the shadow of Thursday's European Central Bank decision, with the Governing Council in its pre-meeting quiet period. The session's main event lands first: New Zealand's second-quarter inflation at 00:45 CET, expected to spike to a two-year high on the Middle East fuel shock, with live read-through for a Reserve Bank that has just begun raising rates. The European morning is dominated by the United Kingdom's labour-market report at 08:00 CET, the last jobs read before the Bank of England's August meeting, followed by the German and euro-area ZEW sentiment surveys at 11:00 CET and the ECB's quarterly Bank Lending Survey at 10:00 CET, a timely gauge of credit conditions two days before the rate decision. The tail of the day is thin: Swiss trade and money supply, Spanish trade, and a Hungarian rate decision expected to deliver a cut, and second-tier US prints inside the Federal Reserve's own pre-FOMC blackout. Oil and the US-Iran conflict remain the dominant macro swing factor beneath the data.
Data Release Previews
New Zealand's Q2 CPI is set to spike to a two-year high as the Middle East fuel shock lifts tradables, testing a Reserve Bank that has just begun hiking
New Zealand's second-quarter inflation is released at 00:45 CET. Consensus looks for prices to rise 1.5% on the quarter, lifting the annual rate to 4.0% from 3.1% and back above the Reserve Bank's 1-3% target band. The acceleration is overwhelmingly fuel-driven: the renewed Middle East conflict pushed petrol up around a fifth and diesel by roughly half over the quarter, and because New Zealand did not shield motorists with a temporary tax offset, tradables prices do the heavy lifting in an unusual reversal of the normal pattern. Underlying and non-tradable measures, by contrast, have been softening and are the numbers the Reserve Bank will watch most closely for any sign the fuel shock is spilling into the wider basket. The market read-through is the live wire. The Reserve Bank raised rates last week for the first time in three years, a recent speech from its chief economist was read as hawkish, and markets now price around a 90% chance of a follow-up 25bp move at the September meeting and roughly a full percentage point of tightening by the middle of next year.
Editor's Note: A hot headline is largely expected and would give the Reserve Bank ample cover to tighten again in September, so the asymmetry runs the other way: the surprise that matters is a soft core/non-tradables read that lets the market fade the fuel spike as transitory. Watch tradables versus non-tradables and the sectoral factor model rather than the headline. The house split is unusually wide — one bank sees 3.8% and another 4.6% — so the tails are fat.
The UK labour market report is the last jobs read before the Bank of England's August meeting, and the second-round effects debate hangs on it
The United Kingdom's labour-market report is released at 08:00 CET. Consensus looks for the ILO unemployment rate to hold at 4.9% in the three months to May, average weekly earnings excluding bonuses to stay at 3.4%, the headline including-bonus measure at 4.5%, and the June claimant count to rise by around 28,000 after May's 31,200. The data come with an unusually large health warning: the statistics office has disclosed an operational problem that cut Labour Force Survey responses between early May and mid-June, so this release leans more heavily than usual on imputation, and its single-month signal should be discounted. The steadier payrolls and claimant-count series, by contrast, point to a jobs market that is gradually loosening, and private-sector regular pay near 2.9% would sit below the Bank of England's own projection. June public-sector net borrowing (prior deficit around £23bn) prints alongside, with the fiscal numbers running ahead of the Office for Budget Responsibility's path so far this year.
Editor's Note: For the Bank of England, the question is whether higher commodity prices produce second-round wage effects, and a soft-but-noisy report reinforces the case of the sceptics on the committee who have downplayed that risk, arguing a soft economy and labour-market slack keep the oil shock from embedding.
Euro Area: The German ZEW survey and the ECB's Bank Lending Survey give the last read on sentiment and credit two days before Thursday's rate decision.
The German and euro-area ZEW surveys are released at 11:00 CET. Consensus looks for German expectations to rise to around 17 from 10.5 and the current-conditions balance to improve to -77.8 from -81.0, with euro-area expectations seen up to 11.5 from 9.5. The forecast range is unusually wide. One camp expects a solid gain buoyed by record equity prices; a hawkish minority argues the survey, conducted in the second week of the month, will have captured the renewed Strait of Hormuz tension and could send expectations sharply lower. At 10:00 CET the ECB publishes its quarterly Bank Lending Survey, the timeliest read on credit conditions before Thursday. The prior survey showed a net tightening of standards for firms and softening loan demand, and a further deterioration would give ammunition to Governing Council members wary of hiking again.
Central Banks
Hungary — MNB rate decision (13:00 CET)
The National Bank of Hungary announces its base-rate decision at 13:00 CET, with consensus and the banks unanimous on a 25bp cut to 5.75% from 6.00%. June headline inflation fell to 1.7%, surprising to the downside for the sixth straight month, and the governor gave explicitly dovish guidance. The recent rise in oil prices and a softer forint are hawkish at the margin but not enough to delay the easing.
Editor's Note: A cut is fully expected, so the signal is in the guidance: how many further cuts the governor flags, and whether the Middle East oil move injects any caution.
Event Risk Calendar
Editor's Note: The Bank Lending Survey is the one to watch for the ECB reaction function: it feeds the transmission leg, and evidence that credit is easing rather than tightening would suggest the Council takes less risk by hiking a second time in September.