Week Ahead 24-28th June:
Mon: BoJ Summary of Opinions, German Ifo Survey (Jun),
German Import Prices (May)
Tue: Japanese Services PPI (May), Canadian CPI (May), UK GDP
(Q1)
Wed: Australian CPI (May), German GfK Consumer Sentiment
Thu: Biden/Trump debate on CNN, Riksbank Announcement, CBRT
Announcement, CNB Announcement, European Council, Chinese Industrial Profits
YTD (May), EZ Sentiment Survey (Jun), US GDP Final (Q1)
Fri: European Council, Japanese Tokyo CPI (Jun)/Activity
Data (May), German Unemployment (Jun), US PCE (May), US University of Michigan
Final (Jun)
Note: Previews are listed in day order
BoJ SOO (Mon):
The Bank of Japan will present the Summary of Opinions from the June meeting next week, offering more insights into the board members’ thoughts during the latest policy meeting. The central bank surprisingly decided to maintain its short-term policy rate at 0.0%-0.1%, contrary to market expectations of an immediate tapering of bond purchases. The BoJ plans to reduce purchases over the next 1-2 years starting from the July meeting, intending to accelerate underlying inflation gradually. Governor Ueda hinted at a substantial reduction in bond purchases and the possibility of a rate hike in July depending on economic data.
Canadian CPI (Tue):
In June, the Bank of Canada lowered rates by 25 basis points to 4.75%, citing easing underlying inflation and a need for less restrictive monetary policy. The central bank is closely monitoring core inflation, demand-supply balance, inflation expectations, wage growth, and corporate pricing behavior, emphasizing its commitment to restoring price stability.
Australia CPI (Wed):
The monthly Consumer Price Index is expected to rise to 3.8% from 3.6%, providing insights into services inflation for the June quarter. Despite potential limitations in the accuracy of monthly CPI indicators, the Reserve Bank of Australia remains vigilant on inflation persisting above target levels and the uncertainty regarding interest rate adjustments.
Riksbank Announcement (Thu):
The Riksbank reduced rates by 25 basis points to 3.75% in May and signaled two additional cuts in the second half of 2024 if inflation trends as forecasted. Focus for the upcoming meeting will be on the expected timing of the rate cuts based on SEB’s investor survey projections.
CBRT Announcement (Thu):
The Central Bank of the Republic of Turkey is likely to maintain its Weekly Repo Rate at 50%, maintaining a cautious approach due to unfavorable CPI and PPI data. The bank signals readiness to tighten monetary policy further if inflation risks heighten, projecting a gradual decline in inflation by year-end. Analysts foresee a potential easing cycle starting in early 2025 despite robust economic activity and ongoing inflation concerns.
Biden/Trump Debate (Thu):
The first debate between President Biden and former President Trump is set to happen, marking the beginning of at least two debates leading up to the November 5th election. Scheduled for Thursday, June 27th at 21:00EST on CNN, the 90-minute debate will take place in Georgia. A recent Fox News poll showed that Biden has a slight lead over Trump, with 50% of respondents favoring Biden compared to 48% for Trump. This shift in polling may be attributed to Trump’s recent legal issues related to falsifying business documents. However, an Ipsos poll indicated that Trump would lead Biden by a small margin of 37% to 35% across seven swing states. Market analysts believe the debate will shed light on the potential impact of increased tariffs on economic growth, inflation, and interest rates. They predict that Trump’s policy initiatives, such as imposing higher tariffs on China, could lead to inflationary pressures, affect the labor market through immigration restrictions, and impact the independence of the Federal Reserve.
Japanese Tokyo CPI (Fri):
The Tokyo inflation data for June, to be released soon, serves as a key indicator for national price trends. The data will be closely watched to see if there is a continuation of the upward trend in headline and core inflation figures observed in the previous month. In May, Tokyo’s headline Consumer Price Index (CPI) exceeded expectations at 2.2%, while core inflation matched estimates. The increase was mainly driven by higher electricity charges and stable growth in food prices. However, underlying inflation is expected to moderate, posing challenges in achieving the central bank’s 2% target. The Japanese government’s recent announcements of extending fuel subsidies and implementing relief measures for electricity and gas bills aim to address these inflationary concerns.
US PCE (Fri):
In May, US Consumer Price Index (CPI) showed a minor decline to 3.3% year-on-year, with the core measure also easing. The Producer Price Index (PPI) exhibited a similar trend, decreasing compared to previous figures. Analysts project that the core Personal Consumption Expenditures (PCE) index rose slightly in May, resulting in a lower core PCE inflation rate year-on-year. The Federal Reserve mentioned modest progress in inflation in its June statement, revising its end-of-year inflation forecast slightly upward. Despite acknowledging a decrease in prices, the Fed remains cautious, emphasizing the need for sustained lower inflation figures before considering rate adjustments. Market expectations for rate cuts have decreased, with projections now indicating only one cut in 2024. However, money markets still factor in a high probability of at least one rate reduction this year.
This article originally appeared on Newsquawk
