• MON: Japanese Holiday (Mountain Day); Chinese Inflation (Jul); EZ Sentix Index (Aug).
• TUE: EIA STEO; German ZEW Survey (Aug).
• WED: US CPI (Jul).
• THU: Banxico & CBRT Policy Decisions, OPEC MOMR & IEA OMR; UK GDP Estimate (Jun); US PPI (Jul).
• FRI: US Uni of Michigan Prelim Sentiment (Aug).

NOTE: Previews are listed in day-order

CHINESE INFLATION (MON): Headline CPI YY is expected to tick lower to 0.8% from June’s 1.1%, with the MM expected to print an uptick at 0.2% vs prev. -0.4%. The PPI YY metric is expected steady at 8.8%. Using the Caixin PMIs as somewhat of a proxy, the latest Services release suggested “the rate of input cost inflation quickened notably in the latest survey period. Costs rose markedly overall, with the increase exceeding the long-run series average. Companies reported having higher staff, fuel, and raw material costs during July.”, whilst the Manufacturing release proposed that “higher expenses were frequently linked to increased prices for a range of raw materials and greater transport fees. The rate of output charge inflation likewise slowed in July, with selling prices rising only slightly overall.” The release also comes amid China’s recent mission to crack down on high raw material prices in a bid to stem the pass-through to consumers. The PMIs noted “prices charged by services companies also increased during July, as firms looked to alleviate pressure on their operating margins”. The analysts at Caixin warn that “The gauges for input and output prices in both the manufacturing and services sectors remained high, indicating immense inflationary pressure.”

US CPI (WED): Currently, the consensus expectation is for the headline and core inflation metric to rise +0.5% M/M in July from the prev. 0.9%. But UBS' big data analytics flags the possibility of upside for this view, noting that food, energy, and core prices all continued higher in the month. The bank is however expecting core goods prices (ex-apparel and transport) to begin falling in the autumn after notable strength in recent years. "We have seen the some initial signs of a weakening of supply drivers of inflation in the ISM (lower delivery time and prices paid indexes) and demand drivers in the PCE data (lower share of core goods in consumption spending), but our guess is that the June slowdown was a blip and we are still a few months away from a sustained weakening," the bank wrote. Fed officials' base case still frames inflation upside as transitory, although key policymakers have been hedging themselves a little; this week, Fed Vice Chair Clarida said that if core inflation rose to 3.0% this year, as he expects, he would consider that 'much more' than a moderate overshoot of the Fed's inflation goal; those comments followed Fed Chair Powell, where in his post-FOMC press conference, said that price pressures would remain elevated in coming months before moderating, but he added that inflation could turn out to be higher and more persistent than expected. Ahead, UBS is above consensus on the inflation profile in the near-term but sees a slowing later this year: "Our inflation forecast remains on the high side of the Bloomberg consensus and the Fed this year, but falls below them next year -- the difference appears to be that we expect stronger inflation over the next few months, but then a greater slowing after the summer as the forces pushing up inflation start to push down inflation." One point to note ahead of next week is that UBS suggests analysts' consensus are somewhat stale, and the bank claims that neither the Fed or 90% of the consensus has updated projections since last month's CPI release; accordingly, the consensus expectations could be revised ahead of the release next Wednesday.

CBRT POLICY DECISION (THU): The consensus expects the weekly repo rate to be left unchanged at 19.00%. Pressure has once again been ratcheted-up on the CBRT ahead of its policy meeting next week. Turkish President Erdogan once again argued his unorthodox view that lower interest rates would actually help curb inflation, telling AHaber TV "no more high interest-rates because high interest rates would bring us higher inflation," and added that "it is not possible for inflation to accelerate further from now on, because we’re transiting to lower interest rates," and cryptically followed by stating "I guess I am giving this signal to somewhere"; Erdogan has previously fired central bank chiefs for hawkish policy moves. Meanwhile, data this week showed Turkey inflation rising to 18.95%, which analysts at SocGen says reduces the real policy rate effectively to 0%, given that the CBRT's key rate is currently at 19.0%.

BANXICO POLICY DECISION (THU): Mexico's central bank lifted the overnight rate by 25bps at the last meeting to 4.25%, an unexpectedly hawkish move and it justified the move stating that despite the shocks that have affected inflation are seen as transitory, it was necessary to strengthen the monetary policy stance in order to avoid adverse effects on inflation expectations. Its decision was split, with two of the five policy makers calling for no change. The central bank also firmed its inflation view, and said it saw inflation above estimates in the next two quarters, and reiterated that the balance of risks to inflation was to the upside. It left forward guidance unchanged, implying monpol's course will hinge on inflation factors. Credit Suisse thinks Banxico will "be very watchful of inflation trends in upcoming weeks, and further rate increases may happen if inflation remains above the bank’s forecast."

UK GDP ESTIMATE (THU): The June GDP report is expected to reveal M/M growth of 0.9% vs. the 0.8% outturn seen in May. RBC frames the May report as one that was characterised by a petering-out of the momentum seen in March and April, where growth was reported at +2.4% and +2.0% respectively. Furthermore, the Canadian bank notes that the May data was primarily driven by growth in the hospitality sector which saw a further reopening during the month; the contribution from other sectors was "negligible". June data is expected to see a continuation of this theme, and subsequently could represent a peaking of the post-pandemic recovery. This will likely be of little surprise to market participants given the latest signalling from the BoE, which has suggested that "recent news on the spread of the Delta variant was likely to push down on GDP growth in Q3 compared with previous assumptions."

UNI. OF MICHIGAN (FRI): Prelim data for August is expected to show a pick-up for headline consumer sentiment, to 82.0 from 81.2. For comparison, the Conference Board's gauge of consumer confidence (July data, but the survey window will be close to Michigan's) saw relatively unchanged levels of confidence after five months of gains; the present situation and expectations were little changed too. Nevertheless, US consumer confidence levels remain near post-pandemic highs. Nevertheless, some desks warn that COVID variants still pose a threat to confidence levels, despite a more optimistic appraisal of labour market conditions. Additionally, we monitor the consumer inflation expectations carefully; Michigan's own data shows consumer expectations of inflation for the year-ahead have picked-up to 4.8% Y/Y, the highest post-pandemic; this comes at a time where Fed officials are starting to put caveats around their 'transitory' view of inflation (see CPI preview above). While consumer inflation expectations tend to run above economist and market-based expectations, the Fed will be cognizant on the potential impact of runaway consumer inflation expectations.