A week ahead June 24-28:
After: Summary of BoJ views, German Ifo survey (June), German import prices (May)
Tue: Japan Services PPI (May), Canada CPI (May), UK GDP (Q1)
Wed: Australian CPI (May), German GfK Consumer Sentiment
Thursday: Biden/Trump debate on CNN, Riksbank announcement, CBRT announcement, CNB announcement, European Council, Chinese industrial profits YTD (May), EZ Sentiment Survey (June), US GDP final (Q1)
Bye: European Council, Japan Tokyo CPI (June)/Activity Data (May), German Unemployment (June), US PCE (May), US University of Michigan Final (June)
Note: Previews are listed in order of days
BoJ SOO (Monday):
The BoJ will publish a Summary of Opinions from its June meeting next week, which could provide further insight into the thinking of board members during the last policy meeting, where it left its short-term policy rate unchanged at 0.0% to 0.1%, as widely expected. the unanimous vote, although it caught markets off guard as it defied expectations that the central bank would announce an immediate curb on bond purchases, opting instead to keep purchases in line with the March decision. However, the BoJ effectively kicked the bucket as it said it wants to cut purchases but will decide at its next meeting in July on a concrete plan to taper bond purchases over the next 1-2 years, while the decision on JGB purchases was made by an 8-1 vote in which board member BoJ Nakamura disagreed, referring to the bank’s decision to limit purchases after reassessing economic activity and price developments in a July 2024 outlook report. The BoJ further said it would hold a meeting with bond market participants (July 9-10) on its policy decision and expects core inflation to gradually accelerate, while Governor Ueda said during the post-meeting press conference that the reduction in JGB purchases will be substantial and they will begin reducing JGB purchases immediately after the July meeting decision, and also noted that the July increase is of course possible depending on the data.
Canadian CPI (Tuesday):
In June, the BoC cut rates by 25 basis points to 4.75%, arguing that monetary policy no longer needed to be so restrictive and continued to show that core inflation was easing. Recent inflation data boosted policymakers’ confidence that inflation will continue to move towards the 2% target, although they still noted that risks to the inflation outlook remain. The Governing Council closely monitors the development of core inflation, adding that it continues to focus in particular on the balance between supply and demand in the economy, inflation expectations, wage growth and the price behavior of businesses. Looking ahead, the BoC said three-monthly measures of core inflation indicated continued downward momentum in CPI, adding that it remained resolute in its commitment to restoring price stability.
Australia CPI (centre):
The monthly CPI is expected to rise from 3.6% to 3.8%. This month’s data will shed light on the development of services inflation during the June quarter. That said, Westpac analysts remind us that only 60% of quarterly CPI is captured by the monthly CPI Indicator, and many components are only tracked for one month each quarter and some only once a year – so they may not accurately reflect quarterly CPI. “Our preliminary forecast for May’s monthly CPI is for a flat print in the month.” “Given the -0.4% month-on-month decline in May 2023, this would mean an increase in the annual rate from 3.6% to 4.0% year over year.” Westpac says, adding that this will be the first time since September 2023 that the annual rate of inflation in the monthly CPI Indicator will exceed the quarterly CPI. Recall that in the last RBA meeting where rates were kept on hold, the central bank kept a hawkish tone on inflation, reiterating that inflation remains above target and appears persistent, and also noted that inflation is easing but doing well. so slower than previously expected and remains high. It also said that the trajectory of interest rates that would best ensure a return of inflation to the target in a reasonable time frame remains uncertain and the Governing Council is neither adding nor ruling out anything. On the data itself, the RBA’s Bullock said they needed a lot to get inflation back into range, noting that you need to look at the whole economy, not just Q2 CPI.
Riksbank announcement (Thu):
In May, the Riksbank cut its rate by 25bp to 3.75% and guided participants to two further cuts to occur during H2-2024 if the inflation outlook materialises. The guidance indicated there would be no cut in June, a point Governor Thedeen specifically reiterated as recently as late May. Recently, on June 4, Breman reiterated the above instructions. On the data side, the May CPIF-XE Y/Y came in slightly above the Riksbank forecast; Note that monthly inflation metrics were subject to significant two-way drivers, including mortgage costs and electricity prices. The June meeting will be a major focus, with the repo path suggesting two cuts are likely in H2-2024, respondents to the SEB Investor Survey believe the path will show the base rate at 3.25% on Dec 24 and 2.75 % in December 25, which is roughly in line with the current trajectory.
CBRT Announcement (Thurs):
The CBRT is expected to keep its weekly repo rate at 50%, according to all 11 economists polled by Reuters, as the central bank is expected to remain on hold for now. May CPI data was unfavorable for CBRT as it accelerated to 75.45% y/y (est. 74.80%, previous 69.80%) and PPI rose to 57.68% y/y from 55.66%. At the May meeting, the CBRT kept its weekly repo rate at 50% for the second consecutive month, in line with all analysts’ expectations. In its statement, the bank emphasized its vigilance in monitoring the effects of monetary policy tightening on credit conditions and domestic demand, stressing the need for a sustained tight monetary stance until a significant and sustained decline in monthly inflation is achieved, with inflation expectations in line with forecasts. . The central bank also indicated that it is ready to further tighten monetary policy if inflationary risks increase, with the aim of establishing disinflation in the second half of the year. CapEco Labor noted that while many analysts forecast a rate cut by the end of the year, CapEco predicts an easing cycle will begin in early 2025. Labor stressed that inflation, expected to peak around 75% year-on-year in May, would it was supposed to drop to 38% by the end of the year. CapEco believes the central bank is likely to maintain its current stance due to strong economic activity and persistent inflation risks. The latest June CBRT survey showed the 12-month repo rate at 35.90% (previously 37.11%); at the end of 2024 USD/TRY at 37.7463 (previously 38.7771); GDP growth at the end of 2024 reached 3.3% (previously 3.3%).
Biden/Trump Debate (Thu):
The first debate between President Biden and former President Trump will be the first of at least two before the Nov. 5 election. The 90-minute debate will take place in Georgia and is scheduled to air on CNN on Thursday 27 June at 9pm EST (28 June 2am BST). A Fox News poll showed Biden ahead of Trump for the first time since October, with 50% of respondents saying they would vote for him, while 48% preferred Trump; Analysts said the survey may reflect Trump’s recent allegations of falsifying business documents. However, an Ipsos poll found Trump would beat Biden 37% to 35% overall in seven swing states (Michigan, Pennsylvania, Wisconsin, Georgia, North Carolina, Arizona, Nevada). As for the impact on the market, analysts see the debate as focusing attention on the impact that higher tariffs could have on growth, inflation and interest rates. Capital Economics said most of Trump’s major policy initiatives would be inflationary, be it reducing the trade deficit through tariffs or devaluing the dollar (reports suggest Trump will impose higher tariffs on China and universal tariffs on other countries to reduce the U.S. trade deficit , which could lead to a higher USD and inflation, and even hit growth rates in the Eurozone), reduce immigration (which could have an impact on the labor market; many argue that higher immigration is a potential explanation for the strength and resilience seen in US labor market data) or threats to Fed independence (there have been several reports that Trump would like to replace Fed chief Powell, potentially with Kevin Warsh, Kevin Hassett or Art Laffer).
Japan Tokyo CPI (Fri):
Tokyo inflation data for June is due next week, seen as a key indicator of national price developments, while participants will be watching the data to see if there is any further acceleration in the headline and core inflation figures last seen in the capital region. Moon. As a reminder, Tokyo inflation printed a mixed bag in May as headline CPI was firmer than expected at 2.2% vs. eyes 2.1% (previously 1.8%), while Ex. Fresh food CPI was in line with estimates at 1.9% vs. eyes 1.9% (previously 1.6%) and Ex. Fresh Food & Energy CPI also printed in line with forecasts but slowed from previous to 1.7% vs. eyes 1.7% (previously 1.8%). The acceleration in headlines and headlines in May was driven by higher electricity bills, which rose 13.1% year-on-year due to an increase in the charge added to electricity bills to cover the cost of supporting renewable energy, and is likely to persist while food prices excluding perishables maintained a growth rate of 3.2%. However, core inflation has moderated and is expected to continue to do so, which, should it materialize, would cast doubt on the ability to sustainably and stably reach the central bank’s 2% target and could effectively reduce the scope for further BoJ rate hikes in this year. Japanese Prime Minister Kishida recently said the government is to extend fuel subsidies until the end of 2024 and introduce measures to reduce electricity and gas bills from August to October.
US PCE (Fri):
In May, the US CPI weakened to 3.3% y/y (est. 3.4%, previous 3.4%), while the core indicator fell to 3.4% y/y (est. 3.5%, previous 3.6%) ; the supercore gauge fell to 4.8% Y/Y, the first decline in the annual supercore rate since last October. Meanwhile, PPI eased to 2.2% y-o-y this month (est. 2.5%, previous 2.3%), while the core gauge eased to 2.3% y-o-y (est. 2.4%, previous 2.4 %) . With this data in hand, analysts are able to accurately predict how the PCE data will come in. The WSJ’s Nick Timiraos told the Fed that inflation modelers expect core PCE to have risen around 0.08-0.13% M/M in May (vs. +0.2% M/M in April); this would imply a 2.6% y/y core PCE inflation rate, down from 2.8% in April, and keep the 6-month annualized core PCE rate around 3.2-3.3% in May, while the 3-month annualized rate would fall back below 3% for the first time since January. In its June inflation statement, the Fed said there had been “moderate further progress” on inflation, although updated economic projections showed the central bank slightly raising its year-end inflation forecast to 2.6% (previously forecast at 2.4%) ). In comments after the meeting, officials generally welcomed the recent rate cuts but spoke of needing to see more data on lower inflation to gain confidence that prices will sustainably fall back to target before they can feel comfortable approving rate cuts. . June’s updated economic projections also revised down the number of rate cuts seen this year (the Fed now predicts just one rate cut in 2024, down from its previous forecast of three, but analysts note how close the median and mode are. would only need a few officials to approve rate cuts to see two cuts this year). Currently, money markets are pricing in a rate cut of around 47 basis points this year – fully discounting one 25 basis point cut and a very high probability of a second cut.
This article originally appeared on Newsquawk