Next week June 24-28:
Monday: BoJ Viewpoint Summary, German IFO Survey (June), German Import Prices (May)
Tuesday: Japan Services PPI (May), Canadian CPI (May), UK GDP (Q1)
married: Australian CPI (May), German Consumer Confidence from GfK
Thursday: Biden/Trump debate on CNN, Riksbank announcement, ECB announcement, ECB announcement, European Council, Chinese industrial profits YTD (May), Eurozone sentiment survey (June), US GDP Final (first quarter)
Friday: European Council, Japanese Tokyo CPI (June)/activity data (May), German unemployment (June), US personal consumption expenditures (May), US-Michigan final result (June)
Note: Previews are listed in order of the day
Bank of Japan Su (Monday):
The Bank of Japan will release a summary of views from its June meeting next week which could provide further insight into board members' thinking during the latest policy meeting as it kept the short-term interest rate unchanged at 0.0%-0.1%, as was widely expected during June. . The vote was unanimous, although it surprised markets as it defied expectations that the central bank would announce an immediate reduction in its bond purchases and instead decided to keep the purchases in line with its decision in March. However, the Bank of Japan effectively delayed the matter as it announced that it would reduce purchases but would decide on a specific plan to reduce bond purchases over the next year or two at the next meeting in July, while the decision on Japanese government purchases was voted 8-1. BoJ Board Member Nakamura objected that the bank should decide to reduce purchases after reassessing developments in economic activity and prices in the July 2024 outlook report. Moreover, the Bank of Japan said it will hold a meeting with bond market participants (on 9- July 10) regarding his policy decision and expects core inflation to gradually accelerate, while Governor Ueda said during the press conference that followed the meeting that the reduction will be the volume of purchases of Japanese government bonds is large and they will begin to reduce purchases of Japanese government bonds immediately after the decision is made at the July meeting, in addition to Indicating that a rate hike in July is naturally possible, depending on the data.
Canadian CPI (Tuesday):
In June, the Bank of Canada cut interest rates by 25 basis points to 4.75%, arguing that monetary policy no longer needed to be restrictive as there continued to be evidence of declining core inflation. Recent inflation data have increased policymakers' confidence that inflation will continue to move towards the 2% target, although they still indicate that risks to inflation expectations remain. The Board of Governors is closely monitoring the development of core inflation, adding that it has remained particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behavior. Before that, the Bank of Canada said three-month core inflation measures point to continued downward momentum in the CPI, adding that it remains firm in its commitment to restoring price stability.
Australian Consumer Price Index (Wednesday):
The monthly CPI is expected to rise to 3.8% from 3.6%. This month's data will highlight the development of services inflation during the June quarter. However, analysts at Westpac remind us that only 60% of the quarterly CPI is surveyed by the monthly CPI, many components are only surveyed for one month each quarter, and some only once a year – and therefore may not accurately reflect Quarterly CPI. “Our preliminary forecast for the monthly CPI for May indicates a flat reading in the month.” “Given a decline of -0.4% per month in May 2023, this would see the annual pace rise from 3.6% per year to 4.0% per year.” says Westpac, adding that this will be the first time since September 2023 that the annual inflation rate in the monthly CPI exceeds the quarterly inflation rate. As a reminder, at the last RBA meeting where interest rates were maintained, the central bank maintained a hawkish tone on inflation as it reiterated that inflation remains above target and is proving to be sustainable, as well as noting that inflation was falling but was in decline. Much slower than previously expected and remains high. Furthermore, he stated that the interest rate path that would best ensure that inflation returns to target within a reasonable time frame remains uncertain and that the Governing Council is not ruling anything out either yes or no. Regarding the data itself, the RBA's Bullock said they had a lot to go to bring inflation back into range and noted that the entire economy should be looked at, not just the second-quarter CPI.
Riksbank Announcement (Thu):
In May, the Riksbank cut the interest rate by 25 basis points to 3.75% and directed participants towards two further cuts during the second half of 2024 if inflation expectations are met. The guidance implied that there would be no reduction in June, a point Governor Theeden explicitly reiterated at the end of May. More recently, on June 4, Breiman reiterated the above directives. On the data front, the CPIF-XE Y/Y for May came in slightly above the Riksbank's expectations; Note that this month's broad inflation measures were subject to important two-way factors including mortgage costs and electricity prices. For the June meeting, the primary focus point will be when the repo path points to the possibility of cuts in the second half of 2024, and participants in SEB's investor survey believe the path will show interest rates at 3.25% on December 24, 2024. 2.75% on Dec 25, which is broadly consistent with the current trajectory.
CBRT Announcement (Thursday):
The CBRT is expected to keep its weekly repo rate at 50%, according to all 11 economists polled by Reuters, with the central bank expected to remain in a wait-and-see mode for now. May CPI data was unfavorable for CBRT as the data accelerated YoY and beat expectations at 75.45% (expected 74.80%, previous 69.80%), and PPI rose to 57.68% YoY from 55.66%. At its May meeting, the Turkish Central Bank maintained its weekly repo rate at 50% for the second month in a row, in line with all analyst expectations. In its statement, the bank stressed its vigilance in monitoring the effects of monetary tightening on credit conditions and domestic demand, stressing the need to continue the tight monetary stance until a significant and sustainable decline in monthly inflation is achieved, with inflation expectations consistent with expectations. . The central bank also indicated its willingness to tighten monetary policy further if inflation risks increase, with the aim of stabilizing inflation in the second half of the year. The desk at CapEco noted that while many analysts expect interest rate cuts by the end of the year, CapEco expects the monetary easing cycle to begin in early 2025. The desk highlighted that inflation, which is expected to peak at around 75% on a Annualized in May, it should fall to 38% by the end of the year. Cabico believes the central bank is likely to maintain its current stance due to strong economic activity and persistent inflation risks. The latest CBRT survey for June showed that the repo rate is expected to reach 35.90% in 12 months (previously 37.11%); The USD/TRY rate at the end of 2024 reached 37.7463 (previous rate 38.7771); GDP growth at the end of 2024 is expected to reach 3.3% (previously 3.3%).
Biden/Trump debate (Thursday):
The first debate between President Biden and former President Trump will be the first of at least two debates before the November 5 elections. The 90-minute debate will take place in Georgia and is scheduled to air on CNN at 21:00 EST on Thursday 27 June (02:00 GMT on 28 June). Going into the debate, a Fox News poll revealed that Biden overtook Trump for the first time since October, with 50% of participants indicating they would vote for him, while 48% showed their preference for Trump. Analysts said the poll may reflect Trump's recent accusations of forging commercial documents. However, an Ipsos poll showed that Trump would defeat Biden by 37% to 35% overall in the seven swing states (Michigan, Pennsylvania, Wisconsin, Georgia, North Carolina, Arizona and Nevada). Regarding the market impact, analysts believe that the debate focuses attention on the impact that higher tariffs could have on growth, inflation and interest rates. Capital Economics said that most of Trump's major policy initiatives will be inflationary, whether that is by narrowing the trade deficit via tariffs or devaluing the dollar (reports indicate that Trump will impose higher tariffs on China and global tariffs on other countries to narrow the US trade deficit, which will It could lead to a rise in the US dollar and inflation, even hitting Eurozone growth rates as well), and reduce immigration (which could impact the labor market; many see higher immigration as a likely explanation for the strength and resilience seen in US labor market data). Or compromising the Fed's independence (there have been multiple reports that Trump is looking to replace Fed Chairman Powell, perhaps with Kevin Warsh, Kevin Hassett, or Art Laffer).
Japanese Consumer Price Index in Tokyo (Friday):
Tokyo inflation data for June is due next week, seen as a leading indicator of national price direction, while participants will be monitoring the data to see if there is a further acceleration in headline and core inflation readings seen in the metropolitan area last year. . Month. As a reminder, Tokyo's inflation rate in May was mixed with headline CPI coming in stronger than expected at 2.2% versus expectations. 2.1% (previous 1.8%), while Ex. The Fresh Food CPI matched estimates at 1.9% versus expectations. 1.9% (previous 1.6%) and ex. The Consumer Price Index for Fresh Food and Energy was also in line with expectations but slowed from the previous reading to 1.7% versus expectations. 1.7% (previous 1.8%). The acceleration in headline and core readings in May was driven by higher electricity tariffs, which rose by 13.1% year-on-year due to increased fees added to electricity bills to cover the cost of encouraging renewable energy and are likely to continue. While food prices, excluding perishable goods, maintained their growth pace at 3.2%. However, core inflation has eased and is expected to continue to do so, which, if achieved, would raise doubts about the ability to achieve the central bank's 2% target sustainably and stably and could effectively reduce the scope for the Bank of Japan to raise interest rates further this year. General. Recently, Japanese Prime Minister Kishida said that the government will extend fuel subsidies until the end of 2024, and introduce measures to ease the electricity and gas bill between August and October.
US Personal Consumption Expenditures (Friday):
In May, the US CPI fell to 3.3% y/y (expected 3.4%, previous 3.4%), with the core measure falling to 3.4% y/y (expected 3.5%, previous 3.6%); The super measure fell to 4.8% year-on-year, the first decline in the annual super rate since last October. Meanwhile, the Producer Price Index fell to a rate of 2.2% y/y in the month (expected 2.5%, previous 2.3%), while the core index fell to 2.3% y/y (expected 2.4%, previous 2.4%). . With this data in hand, analysts can accurately predict how personal consumption expenditures data will look. Inflation modellers expect the core PCE index to rise about 0.08-0.13% month-on-month in May (vs. +0.2), Fed watcher Nick Temiros told the Wall Street Journal. % monthly/monthly in April); This would translate into a core PCE inflation rate of 2.6% y/y, down from 2.8% in April, and would keep the 6-month core PCE inflation rate at around 3.2-3.3% in May, while falling Annual rate for 3 months. Back below 3% for the first time since January In its June policy statement, the Fed said there had been “modest additional progress” on inflation, although updated economic forecasts saw the central bank raise its end-of-year inflation forecasts slightly. To 2.6% (previously, 2.4% was expected). %). In commentary following the meeting, officials generally welcomed the recent decline in rates, but spoke of the need to see more low inflation data to achieve confidence that rates will fall sustainably to the target before they feel comfortable endorsing interest rate cuts. . The updated economic forecasts from June also revised the number of interest rate cuts seen this year (the Fed now expects just one rate cut in 2024, down from its previous forecast of three cuts, but analysts note how close the average and situation are, which is It would only take two officials who support interest rate cuts to see two cuts this year.) Currently, financial markets are pricing interest rate cuts at around 47 basis points this year – which completely rules out a single 25 basis point cut, and a very high probability of seeing that second cut.
This article originally appeared on Newsquak