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Contents 02 Global: Manufacturing Outperforms Services Global manufacturing is booming, reflecting the ongoing AI enthusiasm. Global services sector is expanding but underperforming relative to history.

03 BoE: Set To Hold Again Higher energy prices will draw the MPC’s attention, but limited inflation pass- through should support holding Bank Rate at 3.75% next meeting.

04 ECB: On Hold for Now A unanimous vote while “the burden of proof is on the data”. Another hike is, nonetheless, likely.

Spotlight on Next Week. The Fed is unlikely to hike, despite growing speculation. The BoE is expected to stay on hold.

Contact Simona Mocuta Amy Le Chief Economist Macro-Investment Strategist

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Weekly Highlights Inflation anxiety on the rise again amid Iran re-escalation.

Global: Manufacturing US: New Home Sales ECB: Main Refinancing PMI Index (June) (Jun, thous, saar) Rate

52.2 628 2.4% Still near multi-year high. Better, not yet good. As expected.

CA: Headline CPI (Jun, UK: Headline CPI (Jun, UK: Average Weekly m/m) m/m) Earnings (May, 3-month y/y)

2.8% 2.6% 4.3% Slightly below expectations. June is likely the low point for Labor market weakening inflation. continues.

JP: CPI Inflation (Jun, JP: Core CPI Inflation JP: Manufacturing PMI y/y) (Jun, y/y) (Jul, prelim)

1.7% 1.7% 54.7 Easy base effects. New local low. Solid.

Global: Manufacturing We have repeatedly highlighted in these pages how the US economy is becoming Strong, Services increasingly K-shaped, not just within the consumer space (low-income vs well-to- Relatively Soft do), but also across investment segments (housing vs AI-related). A similar performance divergence exists at the global level across manufacturing and services industries. Global manufacturing is booming, reflecting the ongoing AI enthusiasm. The global purchasing managers’ index (PMI) for manufacturing eased modestly in June, but remains near multi-year highs at 52.2. The current upturn in global manufacturing activity is the strongest since the post-reopening boom and, prior to that, 2017-18. By contrast—though not entirely surprising given the Iran war—global services activity remains soft relative to history. To be fair, the rates of expansion are not that different between the two sectors, but given the stronger default baseline for services, this registers as weakness. It is likely to persist for a while given geopolitical uncertainties.

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