July 13 – July 19, 2026: Weekly economic update

Key Takeaways:

• The policy rate remains unchanged, while the Fed's rhetoric remains cautious.
• Monetary policy remains moderately restrictive.
• U.S. macroeconomic data continue to support a soft-landing scenario: inflation risks are increasing, the labor market is cooling without signs of recession, and current conditions do not yet warrant a rate cut.

Recent U.S. inflation data show resilience, indicating that price pressures are slowly subsiding.

Inflation: Consumer Price Index (May):

• Core CPI (MoM): 0.0% (previous: 0.2%).

• Core CPI (YoY): 2.6% (previous: 2.9%).

• CPI (MoM): -0.4% (previous: 0.5%).

• CPI (YoY): 3.5% (previous: 4.2%).

Producer Price Index (June):

Further constructive indicators emerged as consumer inflation expectations and producer prices shifted lower.

• PPI (MoM): -0.3% (previous: 0.6%).

• Core PPI (MoM): 0.2% (previous: 0.1%).

Inflation Expectations (Michigan) (June):

• 12-month Inflation Expectations: 4.2% (previous: 4.6%).

• 5-Year Inflation Expectations: 3.3% (previous: 3.3%).

Recent inflationary metrics may have lost their relevance following the latest geopolitical escalations involving the U.S. and Iran.

GDP (U.S. Bureau of Economic Analysis, BEA) — Q1 2025 annualized growth rate, third estimate: +2.1% (Q4 2025: +0.5%); forecast: 1.6%; second estimate: 2.0%.

GDPNow (the Atlanta Fed's real-time estimate of official GDP growth ahead of release): 1.7% (previous: 1.4%).

Labor Market (BLS) (May/June):

• Unemployment Rate: 4.2% (previous: 4.3%).
• Continued Jobless Claims: 1.805K (previous: 1.821K).
• Initial Jobless Claims: 208K (previous: 215K).
• Nonfarm Payrolls (NFP): 57K (previous: 129K).
• Private Nonfarm Payrolls: 49K (previous: 97K).
• Average Hourly Earnings (YoY): 3.5% (previous: 3.4%).
• JOLTS Job Openings: 6.866 million (previous: 6.922 million).

Business Activity Index (PMI) (S&P Global) (June) (above 50 indicates expansion; below 50 indicates contraction):

• Services PMI: 51.2 (previous: 51.3).
• Manufacturing PMI: 53.9 (previous: 55.1).
• Composite PMI: 51.9 (previous: 51.5).

Monetary Policy

Effective Federal Funds Rate (EFFR): 3.50%–3.75%.

Federal Reserve Balance Sheet: $6.735 trillion, +3.18% since the suspension of quantitative tightening (QT), when the balance sheet stood at $6.535 trillion.

Fedwatch: For the next FOMC meeting (July 29), the implied market probability of a rate hike has increased to 14.4% (week ago: 34.21%):

Over the next 12 months, the market is pricing in one 25-basis-point rate hike in September this year, bringing the federal funds rate to a target range of 4.00–4.25%.

Today:

A week earlier:

Indices

S&P 500: weekly performance: -1.55% (week-end close: 7457.69); year-to-date: +8.94%.

Nasdaq 100: weekly performance: -4.13% (week-end close: 28592.66); year-to-date: +13.24%.

VIX (volatility index): week-end close at 18.52 points.

Company earnings last week: the start of the earnings season remains strong. Most of the largest US banks significantly beat analysts' expectations on both profit and revenue, confirming the resilience of the financial sector and high business activity. The technology sector is showing mixed dynamics. Strong results came from TSMC and ASML, confirming the continued high demand for semiconductor infrastructure, while Netflix and IBM reported weaker-than-expected figures on certain metrics.

Eurozone

Key Takeaways:

• The ECB raised interest rates, while maintaining a hawkish stance as inflationary risks continue to increase.
• Against the backdrop of the conflict in the Middle East, the ECB revised its GDP forecasts downward and raised its inflation projections for the coming years.

Interest Rates:

• Deposit Facility Rate: 2.25% (previous: 2.0%).
• Marginal Lending Facility Rate: 2.65% (previous: 2.4%) — the rate at which banks can obtain overnight funding from the central bank.
• Main Refinancing Rate (Policy Rate): 2.40% (previous: 2.15%).

Inflation: Consumer Price Index (CPI) (June):

• Core CPI (YoY): 2.4% (previous: 2.6%).
• Headline CPI: -0.1% (MoM) (previous: 0.1%); 2.8% (YoY) (previous: 3.2%).

GDP (Q1 Preliminary Estimate):

• QoQ: -0.2% (previous: 0.1%).
• YoY: 0.3% (previous: 1.2%).

Unemployment Rate (June): 6.2% (previous: 6.3%).

Industrial Production (June):

• MoM: 0.1% (previous: 0.9%).
• YoY: 1.67% (previous: 1.37%).

Purchasing Managers' Index (PMI) (May):

• Services PMI: 49.4 (previous: 47.7).
• Manufacturing PMI: 51.4 (previous: 51.6).
• S&P Global Composite PMI: 50.0 (previous: 48.5).

Euro Stoxx 600 (FXXP1!): weekly performance: -0.05% (week-end close: 642.7); year-to-date: +8.20%.

China

China's economy continues to stabilize, supported by strong export performance, while domestic demand and investment are gradually recovering. Policymakers remain measured and targeted in their approach to economic stimulus.

• Interest rates remain unchanged.
• Monetary policy remains accommodative.
• China reaffirmed its commitment to fiscal support for economic growth under its 2026 plan, including measures to stimulate domestic demand, optimize tax incentives and subsidies, and modernize industrial capacity.

China's macroeconomic data remains uneven. On one hand, the external sector continues to show strong resilience: exports and imports have accelerated, industrial production maintains positive momentum, and business activity remains above the 50-point mark. Consumer price inflation remains low at 1% YoY, thereby preserving room for stimulus policy.

On the other hand, despite import growth rising to 36%, retail sales fell 0.9% MoM, indicating that domestic demand remains the main constraining factor.

GDP growth slowed in Q2 — 0.9% QoQ and 4.3% YoY — while fixed capital investment shows a sharp contraction to -5.7%.

The persistent weakness in investment activity and consumer demand remains the main constraint on more sustainable economic growth in China today.

Interest Rates:

• 1-Year Loan Prime Rate (medium-term lending): 3.00%.
• 5-Year Loan Prime Rate (benchmark for mortgage lending): 3.50%.

Inflation Indicators (June):

• Consumer Price Index (CPI): -0.3% MoM (previous: -0.1%); 1.0% YoY (previous: 1.2%).
• Producer Price Index (PPI): 4.1% YoY (previous: 3.9%).

Trade Data (June):

• Imports: 36.0% YoY (previous: 27.4%).
• Exports: 27.0% YoY (previous: 19.4%).
• Trade Balance (USD): $125.62 billion (previous: $105.43 billion).

GDP (Q2 2026):

• QoQ: 0.9% (previous: 1.3%).
• YoY: 4.3% (previous: 5.0%).

Labor Market:

• Unemployment Rate (June): 5.0% (previous: 5.1%).

Industrial Activity:

• Industrial Production (June, YoY): 5.3% (previous: 4.5%).

Fixed Asset Investment:

• June, YoY: -5.7% (previous: -4.1%).

Retail Sales:

• June, YoY: 0.9% (previous: 1.3%).

Purchasing Managers' Indices (PMI) (May):

• Manufacturing PMI: 50.3 (previous: 50.0).
• Non-Manufacturing PMI: 50.2 (previous: 50.1).
• Composite PMI: 50.6 (previous: 50.5).

CSI 300 Index (000300.HK): weekly performance: -3.82% (week-end close: 4598.32); year-to-date: -1.36%.

Bond Market

The US yield curve remains normal and continues to gradually steepen. Positive spreads between 10-year and short-term bonds point to lower recession expectations, while persistently high yields reflect expectations of a longer period of tight Fed monetary policy.

U.S. Treasury Bonds 20+ Years (TLT ETF): -0.31% for the week (weekly close: 84.21); -3.38% year-to-date.

Yields and Spreads:

• Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity: 4.57% (previous: 4.56%).
• 2-Year U.S. Treasury Yield: 4.19% (previous: 4.21%).
• ICE BofA BBB US Corporate Index Effective Yield: 5.45% (previous: 5.45%).

• The yield spread between 10-year and 2-year U.S. Treasury securities stands at 38 basis points (previous: 35 bps).
• The yield spread between 10-year and 3-month U.S. Treasury securities stands at 77 basis points (previous: 77 bps).

U.S. Treasury Yield Curve:

The cost of a 5-year U.S. Credit Default Swap (CDS) — a market-based measure of sovereign default insurance — dropped to 38 basis points, compared with 38.20 basis points a week earlier.

Commodities and Currencies

Gold Futures (GC): weekly performance: -1.83% (week close: $4042.1 per troy oz); year-to-date: -6.69%.

Oil Futures (CL): oil prices rose to their highest level in nearly a month, paring their decline by roughly 30%, as the escalating conflict once again raises concerns about supplies from the Persian Gulf. Weekly performance: +14.52% (week close: $81.78 per barrel); year-to-date: +42.45%.

Dollar Index Futures (DX): weekly performance: -0.14% (week close: 100.428); year-to-date: +2.48%.

Cryptocurrencies

Bitcoin (Futures): weekly performance: +1.48% (week close: $64,681.78); year-to-date: -26.26%.

Ethereum (Futures): weekly performance: +3.62% (week close: $1,870.89); year-to-date: -37.09%.

Total Cryptocurrency Market Capitalization: $2.20 trillion (vs. $2.17 trillion a week earlier) (coinmarketcap.com).

Crypto asset market shares:

• Bitcoin: 58.6% (previous: 58.3%).
• Ethereum: 10.2% (previous: 9.9%).
• Others: 31.2% (previous: 31.8%).

Net ETF flows showed inflows from Tuesday through Friday.

ETF Net Flows Chart: