24 July 2023
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UK retail sales remain resilient

By Jeanne Walters

UK retail sales remained resilient in June despite higher interest rates, with the volume of sales including fuel rising 0.7% m/m. This was materially higher than the consensus expectation for a 0.2% rise and higher than the 0.1% m/m gain seen in May. The warmest June on record in the UK, together with summer sales promotions, is likely to have boosted footfall and driven strong sales in department stores and food retailers. 

The flash release of the July au Jibun Bank Japan PMI suggests that services business activity remained robust, while manufacturing activity continues to contract. The composite index reading was unchanged between June and the July flash estimate, staying at a value of 52.1. Underlying the composite value was a fractional decline in the services sub-component to 53.9 in July from 54 in June, although with the index value above the neutral 50 value, services activity remains in expansionary territory. There was a marginal uptick in the manufacturing component from 48.1 to 48.4 in July.     

The week ahead will be dominated by central banks with interest rate decisions due from the Fed, ECB and BoJ. The market expects the Fed to raise rates by 25bps on Wednesday to take the upper bound of the federal funds rate to a peak of 5.5%, before starting to cut in 2024. US GDP data for Q2 is also due to be released on Thursday, while the consensus expectations is for headline growth of 1.5% q/q it looks increasingly that consumer spending – a main engine of US growth – is starting to slow.

The ECB is also widely expected to raise rates by 25bps on Thursday, taking the deposit rate to 3.75%. In contrast, the BOJ is generally expected to leave monetary policy unchanged on Friday, although there has been some speculation that Governor Ueda could surprise markets with a change to the yield curve control program.      

Today’s Economic Data and Events

  • 12:00 EC HCOB composite PMI, Jul. Forecast: 49.6
  • 12:30 UK Global/CIPS composite PMI, Jul. Forecast: 52.3
  • 17:45 US Global composite PMI, Jul. Forecast: 53

Fixed Income

  • There were small gains in longer dated US treasuries by the end of trading on Friday. Yields on the 2yr UST were broadly flat, while 10yr yields declined 2bps to 3.835%.
  • European bond yields were generally lower on Friday. The 2yr UK Gilt yield fell 5bps to 4.875%, although the 10yr yield was flat at 4.262%. The 2yr Bund yield fell 1bps to 3.075%, while the 10yr yield dropped 2bps to 2.461%.


  • The Dollar gained against a basket of peers on expectations of a further hike in rates by the Fed, with the index rising 0.2% on Friday.
  • GBPUSD fell 0.1% to reach 1.285, and EURUSD declined 0.05% to 1.1124. There was a sharp jump in USDJPY, which rose 1.2% on Friday to end the day at 141.73.
  • There was also weakness against the dollar amongst commodity currencies, with AUDUSD falling 0.7% to reach 0.6729, and NZDUSD declining 1.06% to 0.6169.


  • US stock markets were mixed on Friday, with traders looking ahead to both the Fed meeting and earnings calls from several big technology companies the week. The S&P 500 and Dow Jones were up 0.03% and 0.01%, respectively, while the NASDAQ declined 0.2%.
  • European energy stocks generally moved the aggregate indices higher on Friday, on the back of rising oil prices. The Euro Stoxx 50 rose 0.4%, the FTSE 100 rose 0.23% and the CAC 40 jumped 0.65% by the end of trading. The Dax was the only European index to decline, falling 0.17%.
  • Locally, the DFM declined 0.04%.


  • Oil prices rose on Friday based on expectations that Chinese officials would soon announce further measures to support the economy.
  • Brent futures ending the day 1.8%% higher at USD81.07/b, while WTI rose 1.9% to USD77.07/b.

Written By

Jeanne Walters Senior Economist

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