Week Ahead: Focus on China GDP and U.S. Retail Sales, More CPI Data on Tap
XM Group | Jul 14, 2023 08:51AM ET
Chinese GDP rebound could mask cracks below the surface
China is rarely out of the headlines these days amid persisting fears that the economic recovery is faltering and doubts about how far the government is willing to go to pump more stimulus. On Monday, when the second quarter GDP estimate is reported, investors will likely breathe a sigh of relief, at least initially.
The economy is expected to have expanded by 7.3% year-on-year, which would make it the fastest growth since the second quarter of 2021. However, GDP shrank in the same quarter of 2022 so this would flatter the annual comparison. Moreover, on a quarterly basis, growth is projected at just 0.5%, which is below China’s average and well below the pace that is needed to achieve yearly growth of around 5% that the government is aiming for.
The inflation releases will wrap up on Friday in Japan where speculation is growing about a possible tweak in policy by the Bank of Japan. Friday’s data could be important in helping policymakers make up their minds if they should lift or remove the upper limit on the 10-year JGB yield.
Headline and core CPI appear to have plateaued in Japan but the so-called ‘core core’ rate continues to climb. Thus, any upside surprises in the June figures could fuel speculation of a July move, boosting the Japanese yen, which is having its best week since November last year.
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