background image background image background image

Saxo Spotlight: Markets face key tests from G3 central bank meetings and a loaded earnings calendar – July 24-28

Macro 8 minutes to read
Saxo Be Invested
APAC Research

Summary:  There will be no dearth of market-moving headlines this week. Central bank announcements from Fed and ECB will focus on how far tightening cycles can continue or if we have reached an end, while Bank of Japan will have trouble continuing to postpone a potential tweak to its yield-curve control. China’s Politburo meeting could bring some disappointments, but we are looking at that as buying opportunities as a cyclical upturn remains in place. Recent equity rally has been top-heavy and any earnings disappointment from big tech like Alphabet, Microsoft and Meta may bring a rotation into cyclicals. Commodity markets also remain a key focus with sentiment turning positive lately, and weather and geopolitical concerns underpinning.

Weekly MI 24 Jul 2023

FOMC meeting: Can the Fed still surprise hawkish?

The FOMC is expected to hike rates by another 25bps this week, but the key question revolves around whether this will be the last rate hike of the cycle. Data has remained mixed with inflation trends softening but labor market remains tight suggesting that the pace of disinflation may remain short of expectations. Market is still not pricing in another rate hike that the Fed signalled in its dot plot, which if reaffirmed could be a hawkish surprise. Still, inflation is slowing broadly and the uncertainty of monetary policy transmission lags would make it difficult for the Fed to surprise hawkish. Stress in the regional banking sector also remains, as signalled by the disappointing earnings form banks like Comerica and Regions Financials. Dovish shifts in the statement could come from job gains not being characterized at “robust” or growth risks seen to be increasing, and these could mean further pressure on the dollar. A clear signal of a September skip could however loosen financial condition further.

US economic data: No landing theme on test

There is also a host of interesting economic data on tap in the US this week. July Consumer Confidence survey is up first on Tuesday after the June survey saw the best Present Situation reading since January of 2022 (normally correlated with labor market sentiment) and a solid jump in Expectations. We’ll also see the first estimate of Q2 GDP on Thursday and June PCE inflation data on Friday, which is more interesting than usual as a material drop in the PCE core is expected on a Y/Y basis, to 4.2% after six consecutive months of 4.6-7% core inflation readings.

Potential disappointment from China’s Politburo meeting may present buying opportunities

The much-awaited Politburo meeting that has a focused economic agenda to review the performance of the economy in the first half and adjust, if necessary, the strategies for the second half of the year is expected to take place towards the end of this week. Last year, the meeting was held on July 28. After several months of eager anticipations to bazooka stimulus policies and disappointments by a long series of piece-meal measures, investors have adjusted down but not written off their expectations for a forceful and comprehensive stimulus package.

At Saxo, we believe that it is unlikely for China to launch an aggressive package as China’s long-term trend growth declined to around 6% before the pandemic. With 5.5% real GDP growth in the first half of the year, the Chinese leadership is unlikely to put long-term financial stability at risk to expand fiscal spending massively and print money. It is important to note that China has been in two important campaigns. First, to deleverage the economy. Second, to transform into a new development paradigm that aims at bringing about higher-quality growth through an increase in productivity and advances in technological innovation. However, the Chinese economy is in a cyclical growth upturn, though it is slow. Positions are light and sentiments are poor so the bar is low for the setting up of a strong rally through Q3 after some initial disappointments from the Politburo meeting.

ECB meeting: A more pronounced dovish shift could weaken EUR

The European Central Bank is widely expected to deliver another 25bps rate hike at its upcoming meeting on Thursday and that would take the deposit rate to 3.75%. However, ECB members have started to turn somewhat cautious in their outlook beyond the July rate hike. But market has been pricing in another rate hike almost fully for this year. The June meeting encompassed comments like there was still “more ground to cover” and the ECB is “not done” on rate hikes from President Lagarde. Absence of such statements may mean a clear dovish shift and lead to market repricing the ECB path lower. Since the prior meeting, headline inflation has cooled to 5.5% from 6.1%, however, the super-core metric ticked higher to 5.5% from 5.3%. Two more inflation readings for July and August will be out before the September meeting so a data-dependent approach may be highlighted, which will trigger the market to expect that we are nearing the end of the ECB tightening cycle. Weak data, particularly a further drop in services PMIs which have so far been holding up the economy, could also weaken the case for more rate hikes from the ECB and weigh on EUR. A close below 1.10 in EURUSD could mean a stronger EUR reversal may be in the cards.

Bank of Japan meeting: How much longer can a YCC tweak be postponed?

The Bank of Japan remains the outlier of the pack, where the first tightening move in the cycle is still awaited. Expectations for a July tweak were running high until last week when some official commentary poured cold water by saying that the BOJ sees little need to tweak yield curve control at the moment. Bank of Japan announcement is scheduled for Friday, and a case for further delay remains with dollar softening and potential for EUR to follow. But headline inflation in Japan has remained above expectations and the 2% target, so even an upgrade to inflation expectations would mean that speculations for a tweak in H2 will continue. It seems that the case for further yen weakness remains.

Caution looms as big tech earnings approach; focus on Alphabet, Microsoft, and Meta results

As big tech companies prepare to release their earnings reports, there is a sense of caution in the air after Tesla and Netflix reported underwhelming results. The focus is now on Alphabet, Microsoft, and Meta, with Alphabet and Microsoft reporting on Tuesday and Meta on Wednesday.

Alphabet (GOOGL:xnas) is expected to experience a 13.7% Y/Y dip in revenue at USD 60.2 billion, but an increase of 14.6% Y/Y in Adjusted EPS at USD 1.44, according to analysts surveyed by Bloomberg. On the other hand, Microsoft (MSFT:xnas) is anticipated to register a 7% Y/Y revenue growth at USD 55.49 billion and a 13% Y/Y increase in Adj. EPS at USD 2.55. For Meta (META:xnas), analysts forecast an 8% Y/Y revenue boost at USD 31.08 billion and a 24% Y/Y surge in EPS at USD 3.06. The recovery of the US online advertising business is contributing to Meta's growth.

A notable point of interest is the competition between Microsoft and Alphabet in the AI narrative. Microsoft has taken the lead with its generative AI space and the launch of 365Copilot, an AI-enabled version of Microsoft Office 365. On the other hand, Alphabet, despite initially losing ground, has an advantage with its years of AI research and access to valuable user data to enhance its solutions. However, one concern for Meta is its comparatively less developed AI advancements. Investors will closely listen to the management call to get insights into any new developments in this area.

Given the significance of these big tech companies in the broader equity market, their earnings reports will likely have implications for the market as a whole. For a more in-depth analysis of the potential impact of these upcoming earnings on the broader equity market, you can refer to Charu Chanana’s article for further information. Additionally, the strength of the US consumer will be on test in the coming week with a host of consumer stocks reporting earnings, including Coca-Cola, McDonald’s, P&G, Visa, Mastercard, GM, Ford.

Commodities: Macro, China, weather and geopolitics on watch

The sentiment on commodity markets is improving recently and last week saw a rally in the Bloomberg Commodity index despite an over 1% gain in the US dollar. Energy market has started to price in the risks of a supply crunch and Brent closed above the key $80/barrel handle last week. But a macro-heavy week ahead could mean that traders could start to lock in gains. Energy stocks also in focus after Chevron reported a beat on its earnings last week and Exxon Mobil due to report this week. Meanwhile, disappointing big tech earnings could bring a rotation in equities with energy sector gaining again as growth nadir may have passed. Metals will remain focused on China announcements due this week as Politburo meeting is expected to take hold, while agricultural grains could stay focused on weather worries and geopolitics after Russia backed off from the Black Sea deal last week.


Earnings this week:

Tue Jul 25: Alphabet, Microsoft, Visa, Raytheon, Texas Instruments, General Electric, Southern Copper, 3M, Acher-Daniels-Midland, CATL, ASM Pacific, Tata Motors

Wed Jul 26: Meta Platforms, Coca-Cola, Boeing, General Dynamics, AAC,

Thu Jul 27: Intel, Mastercard, McDonalds, Comcast, Honeywell, Bristol-Myers Squibb, KLA, Budweiser Brewing (01876:xhkg), Singapore Airlines

Fri Jul 28: Exxon Mobil, Procter & Gamble, Colgate-Palmolive,


Key economic events this week:

MON: EZ/UK/US Flash PMIs (Jul)

TUE: German Ifo Survey (Jul), NBH Announcement, Richmond Fed (Jul)

WED: FOMC Announcement, Australia CPI (Jun)

THU: ECB Announcement, US GDP Advance/PCE (Q2)

FRI: BoJ Announcement & Outlook Report, French Flash CPI (Jun), Spanish Flash CPI (Jun), EZ Business Confidence Survey (Jul), US PCE (Jun)

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • 350x200 althea

    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • 350x200 peter

    Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • 350x200 charu (1)

    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • 350x200 ole

    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.