Morning from Europe.

Remember that “The Week at a Glance” replaces our “Something for Your Espresso” every Monday morning, aiming to highlight the most important events for the week ahead.

The annual ECB conference in Sintra, Portugal kicks off this week, with almost all the heavyweights in attendance. We enter the conference with a semi-dovish macro backdrop in the US economy, marked by the surprise index hitting a two-year low. Our thesis of a comeback in the US economy will be tested this week with the release of the ISMs and the NFP report.

The Fed is currently priced to be the most dovish central bank by far in 2025, which seems odd if the cyclical components of the economy are indeed rebounding, as we see early signs of this in high-beta economies such as Canada, Sweden, and Korea.

Powell will have the opportunity to hint at “insurance cuts” as a base-case for the second half of the year, potentially coordinated with other major central banks. This would imply that any cuts should be moved forward in rates pricing, not delayed.

The US surprise index has historically shown a benign seasonality in July/August, which speaks in favour of positive surprises to an increasingly downbeat sentiment in July and we are already seeing the first signs of that sentiment in the consensus expectations for the key figures this week.

Chart 1a: US key figure surprises are currently weak