UPCOMING EVENTS:

• Monday: PBoC
  MLF, New Zealand Services PMI, China Industrial Production and Retail
  Sales, Eurozone Wage Growth.
• Tuesday: RBA
  Policy Decision, Eurozone ZEW, US Retail Sales, US Industrial Production.
• Wednesday: UK
  CPI, US NAHB Housing Market Index, BoC Meeting Minutes.
• Thursday: New
  Zealand GDP, PBoC LPR, SNB Policy Decision, BoE Policy Decision, US
  Housing Starts and Building Permits, US Jobless Claims.
• Friday:
  Australia/Japan/Eurozone/UK/US Flash PMIs, Japan CPI, UK Retail Sales,
  Canada Retail Sales.

Monday

The PBoC is expected to keep the MLF rate
unchanged at 2.50%. There doesn’t seem to be any urgency to ease policy further
amid an improvement in the economic data. The central bank will also likely
keep the LPR rates unchanged at 3.45% for the 1-year and 3.95% for the 5-year
on Thursday.

Tuesday

The RBA is expected to keep the Cash Rate
unchanged at 4.35%. As a reminder, the central bank got a bit more hawkish amid
a lack of clear improvement in inflation and said that it couldn’t rule in or
out future changes to the cash rate.

The RBA’s forecasts were revised to show
that rates will likely stay at 4.35% until mid-2025. The recent data supports
the case to keep the policy unchanged as the monthly
inflation report surprised to the upside and the labour
market data came in stronger than expected.

The US Retail Sales M/M is expected at 0.3%
vs. 0.0% prior, while the ex-Autos measure is seen at 0.2% vs. 0.2% prior.
Consumer spending has remained stable which is something you would expect given
the solid wage growth and resilient labour market. We are getting some worrying
signals from the UMich
Consumer Sentiment which could suggest that consumer spending is likely to
soften a bit.

Wednesday

The UK CPI Y/Y is expected at 2.0% vs.
2.3% prior, while Core CPI Y/Y is seen at 3.5% vs. 3.9% prior. The last
report was a bit of a disappointment for the BoE as services inflation,
which is what the central bank cares most about, came in much higher than expected
at 5.9% Y/Y vs. BoE’s estimate of 5.5%.

This report won’t change anything for the upcoming
BoE decision on Thursday, but a surprisingly soft release should see the market increase
the rate cuts pricing and tilt the central bank’s decision on a more dovish
side.

Thursday

The SNB is expected to cut interest rates to
1.25% although the market pricing stands around 60%, so it’s more of a coin-flip
between 1.50% and 1.25%. The latest inflation
rate came in line with SNB’s estimate at 1.4% Y/Y (Core 1.2% Y/Y).

The Swiss Franc saw a strong appreciation
recently due to Chairman Jordan’s comments
where he said that if any inflation risk were to materialise, it would most
likely be associated with a weaker Franc which could be counteracted by selling
foreign exchange (buying CHF).

He also touched on the neutral interest
rate (r*) and said that they estimate it to be around 0%. So, even if they cut
rates, in theory their policy would still be restrictive and if inflation were
to rise somewhat in the coming months, they could just intervene by buying
Swiss Franc.

The BoE is expected to keep the Bank Rate
unchanged at 5.25%. As a reminder, the last meeting was a bit more dovish than
expected with Ramsden joining Dhingra voting for a rate cut and Governor Bailey
delivering some dovish comments like saying that they could cut more than
the market expected.

It’s pretty evident that the central bank
is eager to cut but nonetheless wants a bit more confidence before easing the
policy rate. The tone will likely be shaped by the UK CPI the day before.

The US Jobless Claims
continue to be one of the most important releases to follow every week as it’s
a timelier indicator on the state of the labour market. Initial Claims keep on
hovering around cycle lows, while Continuing Claims remain firm around the
1800K level.

This has
led to a weaker and weaker market reaction as participants become used to these
numbers. Nonetheless, we got a notable
miss in both Initial and Continuing Claims last week although the culprit
might have been just a seasonal effect or measurement
adjustment.

This week Initial Claims
are expected at 240K vs. 242K prior, while there’s no consensus at the time of
writing for Continuing Claims although the prior release showed an increase to
1820K vs. 1790K previously.

Friday

The Japanese Core CPI Y/Y is expected at 2.6%
vs. 2.2% prior. The Tokyo CPI saw all inflation measures increasing compared to
the prior month, so we might see the same happening for the National readings.
It shouldn’t change much for the BoJ at the moment as they will likely need a
couple more reports before deciding on another rate hike.

As a reminder, the central bank
disappointed the market last week as it kept everything
unchanged despite expectations of a reduction in bond purchases. Nonetheless,
Governor Ueda in the press conference pre-committed
to a reduction immediately after the next meeting and mentioned that it will be
“substantial”.

Friday will also be the Flash PMIs Day
with the markets, as it usually the case, focusing more on the US readings:

• Eurozone Manufacturing PMI: 48.0 expected vs.
  47.3 prior.
• Eurozone Services PMI: 53.5 expected vs. 53.2
  prior.
• UK Manufacturing PMI: 51.0 expected vs. 51.2
  prior.
• UK Services PMI: 53.2 expected vs. 52.9
  prior.
• US Manufacturing PMI: 51.0 expected vs. 51.3
  prior.
• US Services PMI: 53.5 expected vs. 54.8
  prior.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

„Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.“

That’s the first amendment and may prove to be what undoes liberal democracies. Worse yet, the Supreme Court has interpreted ‚free speech‘ extremely broadly, including the use of money as free speech.

It’s increasingly clear to me this is an extreme vulnerability that being exploited in the US and around the world.

On June 6 the State Department’s top official on digital and cyber
policy, Nate Fick, told an audience at an event hosted by the Washington Post:

“I don’t think most American
citizens really viscerally understand how much of the content they see
on social platforms is actually a foreign intelligence operation…. I
just don’t think we viscerally get how much of what we see is
bot-generated or foreign intelligence service–generated.”

I have little doubt that’s true and an increasing fear that much of what I see — and maybe even things I believe — has been hijacked by these groups.

Seeing the tools that are out there with AI and bots, I believe it’s almost trivial now to set up a bot farm. If I were an anti-American Russian doing it, I wouldn’t be writing „Mother Russia is great,“ the aim would be to sow division, to crank up the volume on any issue, to inspire American hate for other Americans.

Divide and conquer.

I also believe that Russia sees itself as a victim of this game, rightly or wrongly. They believe that the Euromaidan rallies in Ukraine — which were organized on social media — were a US influence operation.

On Friday, Reuters reported an incredible story. During the peak of the pandemic, the US was running an online operation to discredit the Chinese vaccine in the Philippines and ultimately vaccines in general, putting thousands of lives at risk and the Philippines had among the worst inoculations rates in Southeast Asia.

It was part of a petty fight after China started a “disinformation campaign to falsely blame the United States for the spread of COVID-19,“ according to the report.

If the US was willing to do that to the Philippines, what is it doing elsewhere?

Reuters reports:

Today, the military employs a sprawling ecosystem of social media
influencers, front groups and covertly placed digital advertisements to
influence overseas audiences, according to current and former military
officials…. in February, the contractor that worked on the anti-vax campaign –
General Dynamics IT – won a $493 million contract. Its mission: to
continue providing clandestine influence services for the military.

This has been going on for a long time. In 2013, Reddit revealed that Eglin Air Force Base in Tampa Bay (the home of the US’s propaganda wing) was it’s most-addicted city.

After Euromaiden, the Russians became determined to retaliate and that was why the Internet Research Agency — founded by Yevgeny Prigozhin — was at work in the 2016 US election. I suspect the Russians were amazed at how well it worked and so did the rest of the world. The aim isn’t to invent stories but to elevate conspiracies and make people angry.

Given the comments from the State Department, the US knows its a target. Heather Cox Richardson wrote about it earlier this week:

Officials from the Office of the Director of National Intelligence
(ODNI) told lawmakers that Russian influence operations aimed at
undermining support for Ukraine and faith in democratic institutions
provide the top threat to the upcoming U.S. election. China is the
second-greatest threat but is more cautious because it is concerned
about U.S. blowback, while the third, Iran, acts primarily as a “chaos
agent,” trying to confuse voters. The ODNI officials said they have been
issuing warnings to political candidates, government officials, and
others targeted by foreign groups.

That brings us back to free speech. These kinds of campaigns are going to prove nearly-impossible to stop. Democrats like it when false rumours are spread about Republicans and vice versa. Anyone trying to stop the rumours would be seen as partisan or disloyal. It’s a win-at-all costs mentality that puts party ahead of country.

AI is going to hyper-charge this. There will be individually-optimized campaigns based on your data that create videos and ads targeted at you personally to make you unhappy and enraged.

Yes, some bot farms will be shut down but 10 more will spring up. I don’t see any way to stop it. The first amendment is written in stone and social platforms are open, anonymous and for sale.

What can we do? Ban anonymity online? That would be extremely unpopular. Go to a censored, walled-off internet like China? That’s completely incompatible with the Constitution and freedom in general.

For markets, the destabilization will inevitably lead to conflict and division; none of which can be good for growth.

This article was written by Adam Button at www.forexlive.com.