Markets’ eye swings to US jobs, rate hikes, Australia’s GDP
Nonetheless, “a continued slowdown in payrolls and wage growth will eventually convince officials to slow the pace of tightening by the fall,” he said.
Christopher Waller, James Bullard and Loretta Mester are among the Fed officials scheduled to speak in the coming week about the US economic outlook. The central bank on Wednesday will issue its latest Beige Book – a region-by-region assessment of recent economic activity.
The economic calendar for the week ahead also includes data on job openings in April, which will offer a hint at whether labour demand is starting to simmer down. Other figures include May surveys of purchasing managers in manufacturing and services, and a report on consumer confidence.
Elsewhere, a prospective half-point rate increase in Canada, another record reading of eurozone inflation, slowing Brazilian growth and the first GDP report for Anthony Albanese’s government may be among the highlights.
Australia GDP, inflation
The Bank of Canada is expected to continue its aggressive rate-hiking cycle on Wednesday as it scrambles to rush policy settings back to more neutral levels.
Markets and most economists expect a second straight half-percentage point increase that would take the central bank’s benchmark overnight rate to 1.5 per cent.
A third 50 basis-point hike is expected in July, before the Bank of Canada slows down the pace of tightening toward the end of the year, at which time officials are hoping the inflation scare will be in the rearview mirror.
Australia’s new prime minister, Anthony Albanese, finds out this week how the economy he inherited performed in the first quarter. Gross domestic product is expected to have slowed as floods and omicron weighed, though the bigger concern going forward is how inflation will hit household budgets and consumption, and how the government will respond.
China’s purchasing managers indexes may show some improvement in May from April’s slump. With the nation’s leaders becoming increasingly concerned over the outlook, there’s likely to be close scrutiny of forward-looking sub-indices.
India’s economy probably expanded more slowly than previously estimated in the year through March as a third wave of COVID-19 and the war in Ukraine arrested momentum.
Capital spending figures in Japan will signal whether revised GDP figures will show a larger contraction or not. A slew of production and sales data for April will gauge the initial strength of the rebound.
Still, Bank of Japan speakers are likely to reinforce the message that the central bank must keep easing, even with inflation above 2 per cent.
South Korean trade figures may point to a slowing in global demand and the impact of supply-chain snags in locked-down parts of China. Korean inflation due on Friday is likely to accelerate. The Bank of Korea has already flagged price growth will rise above 5 per cent in coming months after hiking rates at its last meeting.
A record for eurozone inflation, mirrored by a 14-month low in economic confidence, may be among the data highlights for the last full week before the European Central Bank’s crucial June rate decision.
With a pre-meeting blackout period due to begin on Thursday, final comments by several Governing Council officials will draw attention. They include the central bank governors of France, Italy, Spain and Ireland, along with ECB Chief Economist Philip Lane.
In Brazil, analysts expect the country’s broadest measure of inflation to have slowed for a 12th month in May while failing to break below 10 per cent.
On Thursday, first-quarter data are expected to show that Brazil’s economy slowed from the modest expansion seen in the last three months of 2021. Given abundant headwinds, look for slow growth into 2023.