This Week Focus Point 06-10 June 2022

This Week Focus Point 06-10 June 2022

Stocks in the United States will try to regain some ground after closing in the red on Friday, with investors looking for signs that inflationary pressures are receding. In addition, the May inflation rate, as well as external trade data and consumer confidence, will be scrutinized. Markets will also pay particular attention to central bank meetings in the Eurozone, Australia, and India, as well as China’s CPI and services PMI.

The economic calendar in the United States is light, with the CPI report, trade balance, exports, and imports, as well as preliminary Michigan consumer confidence, taking center stage. In May, the annual inflation rate is expected to remain stable at 8.3 percent, slightly lower than the 41-year high of 8.5 percent set in March. The monthly rate, on the other hand, is likely to have risen to 0.7 percent since fuel prices rose again last month. On the corporate front, only Campbell Soup, Brown-Forman, Signet Jewelers, and DocuSign have issued earnings reports.

Elsewhere in America, unemployment figures for Canada, trade data for Canada and Brazil, inflation rates for Brazil and Mexico, and interest rate decisions in Chile and Peru will all be closely watched.

The European Central Bank (ECB) will make monetary policy decisions, with markets anticipating the end of large-scale asset purchases and confirmation of a rate hike in July. Money markets have fully priced in a 25 basis point interest rate hike at the July meeting, with roughly 124 basis points more tightening priced in by the end of the year to combat high inflation.

In terms of economic indicators, Germany’s industrial production is expected to improve after plunging to its lowest level in over two years in April, while manufacturing orders are expected to climb following two months of decreases. The Eurozone’s final estimates of first-quarter GDP growth and employment change; the UK’s final PMIs and Halifax house price index; France’s balance of trade; Italy’s retail trade and industrial activity; and Switzerland’s and Turkey’s unemployment rates are among the other important releases.

On the monetary policy front, the Reserve Bank of Australia is expected to raise the official cash rate by 25 basis points for the second meeting in a row, while the Reserve Bank of India is expected to maintain its rate hike path and deliver another 40 basis point increase in borrowing costs, despite inflation reaching levels not seen in eight years.

External trade data, consumer and producer inflation, and the Caixin Services and Composite PMIs for May should provide a new update on the scope of COVID-19 lockdowns and their impact on growth in China.

Final GDP growth estimates for Q1, household spending for April, coincident and leading indicators, eco watchers survey, producer prices, and machine tool orders will all be watched closely in Japan.