JFD-Brokers Weekly Outlook: ECB, PBoC, Global PMIs & Japan’s Upper House Election in Focus

Weekly Outlook: ECB, PBoC, Global PMIs & Japan’s Upper House Election in Focus

🇯🇵 Japan: Upper House Election (Sun)

The ruling LDP-led coalition risks losing its majority in the Upper House. This would likely force Prime Minister Ishiba to collaborate with opposition parties — potentially through fiscal incentives such as tax cuts or direct payments. Due to this political uncertainty, 10-year Japanese government bond (JGB) yields have surged to their highest levels since 2008. For the Bank of Japan (BoJ), this creates additional political pressure and complicates any further monetary tightening.

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🇨🇳 China (Mon): PBoC LPR Rate Decision

The People’s Bank of China is expected to keep its loan prime rates unchanged:

• 1-Year LPR: 3.00%

• 5-Year LPR: 3.50%

Following significant rate cuts in May and in light of solid macro data (Q2 GDP and industrial production beat expectations, while retail sales disappointed), the central bank currently sees no need for further action.

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🇪🇺 Eurozone (Thu): ECB Policy Decision

Markets assign a 94% probability that the ECB will leave interest rates unchanged. After the June rate cut, the ECB sees its policy stance as well-positioned. Key downside risks include:

• Ongoing trade tensions with the US (threat of tariffs)

• The strong euro, which is further dampening inflation

Currently, markets are only pricing in a modest additional easing (~24bps) by year-end. This week's meeting is therefore expected to be a "placeholder" event without major new guidance.

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📊 Flash PMIs – EZ, UK & US (Thu)

Eurozone (Thu)

• Manufacturing PMI: Expected at 49.7 (vs. 49.5 prior)

• Services PMI: 50.8 (vs. 50.5)

• Composite PMI: 50.9 (vs. 50.6)

The data suggests modest growth, though risks remain from weak order books and US tariff threats.

United Kingdom (Thu)

• Manufacturing PMI: 48.0 (slightly higher)

• Services PMI: 52.9

• Composite PMI: 51.8 (slightly lower)

The UK economy shows signs of modest recovery, but lingering uncertainty over autumn tax policy and Brexit aftershocks continue to weigh on sentiment.

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🇬🇧 UK Retail Sales (Fri)

After a sharp 2.7% drop in May, retail sales in June are expected to rebound by 1.1%. Despite the expected recovery, high inflation and political uncertainty are keeping consumer sentiment subdued.

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📅 Weekly Calendar – Key Events:

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