Investing.com — Inflation data from the US, Eurozone and Japan will be in focus in the shortened holiday week ahead. The health of China’s manufacturing sector will also be in the spotlight, while concerns over the outlook for demand may continue to weigh on oil prices. Here’s your look at what’s happening in the markets for the week ahead.
- US inflation data
The Fed’s preferred gauge of inflation – the personal consumption expenditure price index () – due on Friday will be closely watched for clues about the direction of interest rates over the rest of the year.
The data comes as markets are reeling from talk of higher interest rates for longer after the Fed’s minutes in recent weeks, along with cautiously sounding remarks from policymakers who expressed doubts about whether inflation is really on an upward trajectory. reliable downward.
Investors will also have the opportunity to hear from several Fed speakers during the week, including Governor Michelle Bowman, Cleveland Fed President Loretta Mester, Governor Lisa Cook, New York Fed President John Williams and Atlanta Fed President, Raphael Bostic.
The economic calendar also includes revised first-quarter economic data on Thursday and the Fed’s on Wednesday.
- Eurozone inflation
The European Central Bank has promised to cut interest rates from a record 4% at its June meeting, but it remains to be seen how quickly it will cut rates after that, especially if published inflation data from on friday they show the price. pressures remain unstable.
Economists expect eurozone inflation to rise in May year-on-year, from 2.4% in April, while core inflation is seen holding steady at .
That alone is unlikely to deter the ECB from tapering in June, but some officials are already arguing against the need to ease further.
The economic calendar for the bloc also includes Germany’s on Monday and the ECB’s survey on Tuesday.
- Japanese date
data due on Friday will be closely watched as markets try to gauge when the Bank of Japan might raise rates further.
The figures come two weeks ahead of the BOJ’s next monetary policy meeting, where some are betting the central bank could deliver a second rate hike after March’s landmark move.
Policymakers are facing mounting pressure to raise rates amid continued yen weakness that hurts consumption by inflating the cost of raw material imports.
Also on Friday, the Finance Ministry will release intervention data covering the latest rounds of suspected intervention and the BOJ’s bond buying schedule, where traders will watch for cuts in the central bank’s purchase amount.
- Chinese activity
China will release year-to-date data on Monday with market watchers eager to see whether earnings rebounded in April after a sharp decline last month slowed the pace of earnings for the first three months to 4.3%.
China will release its official and PMIs on Friday. Economists expect the manufacturing index to remain just above the 50 threshold that separates growth from contraction for a third month in May.
Beijing has set an ambitious economic growth target of around 5% for this year, which many analysts say will be a challenge to meet as prolonged weakness in the property sector and tepid consumer demand remain a obstacle to the second largest economy in the world.
5. Oil prices
Oil prices rose about 1% on Friday, but posted a weekly loss on concerns that strong US economic data would keep interest rates high for longer, curbing demand for the fuel.
closed up 2.1% for the week. It fell for four straight sessions last week, its longest losing streak since January 2. was down 2.8% for the week.
Higher interest rates raise the cost of borrowing, which could slow economic activity and dampen demand for oil.
Oil demand is still strong from a broader perspective, analysts at Morgan Stanley wrote in a note, adding that they expect total petroleum liquids consumption to rise by about 1.5 million barrels per day this year.
U.S. soft gasoline demand has been offset by global demand, which surprised to the upside, especially at the start of the year, analysts said.
–Reuters contributed to this report
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