Today’s key release will be the preliminary reading of June’s national inflation.
After May’s surprise, which contrary to market forecasts brought inflation down to 3.1%, today we expect further decline to 2.7% y/y, exactly the market consensus.
June inflation will also be known in Germany.
Additionally, in the Czech Republic the third reading of Q1 GDP will be published, and in the USA further consumer sentiment surveys, Conference Board.
Morning retail sales data in Germany turned out to be clearly better than expected.
Construction has the best result since the pandemic, but retail trade worries
According to the European ESI survey, in June Poland saw a slight improvement in business sentiment (up 0.3 points month‑on‑month to 100.6 points). The overall employment index remained the fourth month in a row close to 103 points, where 100 represents the average since 2000. Sentiments improved in industry thanks to better future activity forecasts by manufacturers.
The sectoral sentiment index in construction fell in June by less than its improvement in May, but note the improving fourth month in a row of the index component describing current economic activity – it rose to the highest level since the pandemic outbreak. Consumer sentiment improvement (+0.5 points) was less spectacular than in May (+2.7 points).
At the same time consumer expectations about their own financial situation and the Polish economy improved, and fears of rising inflation and unemployment fell. The saving‑possibility index for the next 12 months saw a fairly large decline, although its level remains historically high.
We are concerned that despite improving consumer sentiment, anxiety among retail trade firms is mounting: the sectoral index was lowest in June since November. Overall, however, ESI results are consistent with our scenario for Poland this year, with an economic growth of about 3.6%.
Markets focus on Sintra. Lagarde and Warsh will speak, while the zloty and oil are stagnant
Yesterday the annual ECB forum in Sintra dedicated to central banking challenges began. The forum will last until Wednesday and we can expect public statements from, among others, Christine Lagarde and Kevin Warsh, which may be followed by the market.
Despite the ongoing ceasefire between the USA and Iran, the atmosphere in the Middle East is tense, and clashes occasionally occur in the Strait of Hormuz. According to Donald Trump, talks between the two sides of the conflict should take place today in Qatar, although Iranian representatives deny such arrangements.
Nevertheless, oil prices yesterday practically did not change and moved in a narrow range of $72‑73 per barrel. The position of the Polish zloty also practically did not change, and EURPLN again crossed 4.29.
The debt market was calm yesterday; yields and market rates recorded only marginal changes, both domestically and on base markets. Over the entire week, bond yields were 12‑16 basis points lower yesterday.
