MNI GLOBAL WEEK AHEAD - Canada, UK and Japan CPI Headline
The week ahead is headlined by Canada, UK and Japan CPI.
Developed Markets
TUESDAY: Canada CPI
Straight after market closures for Victoria Day on Monday, CPI inflation will be watched closely ahead of the June 5 BoC decision. The strength of jobs growth in April, despite being met by another surge in labour supply, has seen market pricing shift to roughly 50/50 odds of a rate cut in June. The Bank said after its April meeting that it’s seeing the sort of readings it needs to see to start cutting interest rates, but it just needs to see it for longer. Core metrics then surprised even lower in the March report released the week after, with the trim and median measures averaging just 1.3% annualized over three months and 2.3% over six months. We wouldn’t be surprised to see a sizeable increase in June cut probabilities if we see monthly print consistent with the 2% inflation target although Q1 GDP awaits on May 31.
WEDNESDAY: RBNZ Decision
The RBNZ meets on May 22 and will also release updated staff forecasts and hold a press conference. It is widely expected to leave rates at 5.5% as it is yet to be confident that inflation will sustainably return to target. Q1 CPI data showed a further moderation in price pressures but elevated domestically-driven inflation remains a concern. The labour market eased further but there has been limited moderation in wage growth. Rates are likely on hold for some time now and the bar seems high for the RBNZ to move them in either direction this year.
WEDNESDAY: UK CPI + Flash PMI
We think that Wednesday's CPI print will be the most important single indicator determining whether the BOE cuts rates in June or remains on hold (likely until August). April CPI is particularly important for the UK as a number of services prices see their annual price increases including mobile phone contracts, broadband, TV, some gym memberships and water/sewerage. Last year both the Bank of England's forecast and the analyst consensus were surprised at how high services inflation was in last year's April print. For this print, the Bank of England looks for services CPI at 5.52%Y/Y while the early analyst consensus seems to be a bit softer than this at around 5.4%Y/Y at present, down from 6.0%Y/Y in March. With markets still pricing around a 50/50 chance of a June first cut, we would expect to see a decent market reaction to either a higher or lower-than-expected print. In addition to the CPI print, Thursday will see the UK flash PMI released. The headline number of course is important here, as always, but even more important will be whether the report still points to evidence of lower passthrough of costs to prices (services prices in particular). This was something that was evident in last month's PMI surveys and has been picked up by the BOE's Agents' survey. And because of this, MPC members have placed less emphasis on wage growth. If this is not the case in this PMI print, and costs are passed through to a greater extent, the MPC will likely be a lot more hesitant to cut in June.
WEDNESDAY: FOMC Minutes
The minutes to the May FOMC meeting (Wednesday 1400ET/1900BST) could provide a bit more insight into how the Committee's view of the likely rate path has changed as participants sharpen their pencils for June's Dot Plot update. The message from Chair Powell and other members has been a fairly emphatic "high for longer", with a rate cut still the base case for the next move but without a firm timeline. Any discussion of the burden of proof for cuts (eg several months of disinflation providing sufficient "confidence" to ease) would be closely scrutinized. In this context, it would be a hawkish surprise if any participants entertained the possibility of future hikes if necessary. With so little detail on the FOMC's QT tapering decision emerging from the meeting, the minutes will be eyed for discussion about the ultimate destination of the balance sheet, and potential long-term strategies including a shift in the SOMA portfolio maturity toward shorter-duration Treasuries.
FRIDAY: Japan CPI
National CPI prints on Friday. It is expected to moderate in Y/Y terms versus the prior print. The Tokyo CPI fell sharply in April as education subsidies impacted the result. This won’t be replicated at the national level though. Otherwise underlying trends will be monitored particularly in light of this week’s weaker than expected GDP print.
Emerging Markets
TUESDAY: National Bank of Hungary Rate Decision
Virag's mid-week commentary on the policy path were typically direct, and leant against any outside expectations that the NBH could slow the pace of their easing path as soon as Tuesday's rate decision. The deputy governor made clear that he expects a further 75-100bps of rate cuts across H1, before a slower pace of easing into year-end. This leaves a 50bps rate cut in May and either a 25 or 50bps rate cut in June as the most probable outcomes. Beyond that, the extent of the expected bounce in inflation through the summer will define the policy path into 2025.
WEDNESDAY: Bank Indonesia Rate Decision
Bank Indonesia (BI) hiked rates 25bp at its April meeting to defend the rupiah but the move had little impact and the central bank had to intervene in the market at the start of May. USDIDR is down 1.2% since the day before that meeting. Given these developments, we do not expect BI to raise rates again at its May 22 meeting. Inflation remains within the target band, with core at the lower end, and growth remains robust. For now BI is likely to keep rates steady.
THURSDAY: Bank of Korea Rate Decision
The BOK is likely to remain on hold. Governor Rhee noted recently it was too early to pivot towards an easing, given external developments around the Fed and geopolitical risks from an oil price standpoint. Domestic growth is being held up by stronger exports. Easier settings are likely once the Fed cycle moves this way, so more likely towards the end of the year.
THURSDAY: Central Bank of the Republic of Turkey Rate Decision
At 50%, markets and the CBRT see little justification for the key rate to be pushed higher, despite the government's renewed fervour for inflation to be contained, helping unlock a virtuous circle of slower FX depreciation, faster foreign capital inflow and lower risk premia on Turkish assets. Of more market relevance will be any reference to macroprudential measures, particularly in light of the public savings package detailed by VP Yilmaz and Treasury Minister Simsek this week. The package makes a clear preference for further fiscal consolidation, a process which is expected to be supported by further tweaks to credit channels and liquidity conditions.
THURSDAY Banco Central de Chile Rate Decision
The central bank of Chile is expected to cut its monetary policy rate by 50bp to 6.0% next week, as policymakers continue to move to a slower pace of easing, following a 75bp cut in April and 100bp reduction in January. Inflation in April surprised to the upside, limiting room for BCCh to adopt a more dovish stance, while the recent surge in copper prices has prompted the government to raise its GDP growth forecasts.
Date | GMT/Local | Impact | Flag | Country | Event |
18/05/2024 | 2145/1745 | ![]() | US | Fed Governor Adriana Kugler | |
19/05/2024 | 1930/1530 | ![]() | US | Fed Chair Jerome Powell | |
20/05/2024 | 0600/0800 | ** | ![]() | DE | PPI |
20/05/2024 | 0900/1000 | ![]() | UK | BOE's Broadbent Monetary Mechanism Workshop | |
20/05/2024 | - | ![]() | UK | DMO to hold quarterly consultation investors / GEMM consultation | |
20/05/2024 | 1300/0900 | ![]() | US | Fed Vice Chair Michael Barr | |
20/05/2024 | 1300/0900 | ![]() | US | Fed Governor Christopher Waller | |
20/05/2024 | 1430/1030 | ![]() | US | Fed Vice Chair Philip Jefferson | |
20/05/2024 | 1530/1130 | * | ![]() | US | US Treasury Auction Result for 26 Week Bill |
20/05/2024 | 1530/1130 | * | ![]() | US | US Treasury Auction Result for 13 Week Bill |
21/05/2024 | 0130/1130 | ![]() | AU | RBA Minutes | |
21/05/2024 | 0800/1000 | ** | ![]() | EU | Current Account |
21/05/2024 | 0900/1100 | ** | ![]() | EU | Construction Production |
21/05/2024 | 0900/1100 | * | ![]() | EU | Trade Balance |
21/05/2024 | 0900/1000 | ** | ![]() | UK | Gilt Outright Auction Result |
21/05/2024 | 1000/1100 | ** | ![]() | UK | CBI Industrial Trends |
21/05/2024 | 1230/0830 | *** | ![]() | CA | CPI |
21/05/2024 | 1230/0830 | ** | ![]() | US | Philadelphia Fed Nonmanufacturing Index |
21/05/2024 | 1255/0855 | ** | ![]() | US | Redbook Retail Sales Index |
21/05/2024 | 1300/0900 | ![]() | US | Fed Governor Christopher Waller | |
21/05/2024 | 1530/1130 | * | ![]() | US | US Treasury Auction Result for Cash Management Bill |
21/05/2024 | 1545/1145 | ![]() | US | Fed Vice Chair Michael Barr | |
21/05/2024 | 1700/1800 | ![]() | UK | BOE's Bailey Lecture at LSE | |
21/05/2024 | 2300/1900 | ![]() | US | Atlanta Fed's Raphael Bostic | |
21/05/2024 | 2300/1900 | ![]() | US | Cleveland Fed President Loretta Mester | |
22/05/2024 | 2301/0001 | * | ![]() | UK | Brightmine pay deals for whole economy |
22/05/2024 | 2350/0850 | ** | ![]() | JP | Trade |
22/05/2024 | 2350/0850 | * | ![]() | JP | Machinery orders |
22/05/2024 | 0200/1400 | *** | ![]() | NZ | RBNZ official cash rate decision |
22/05/2024 | 0600/0700 | *** | ![]() | UK | Consumer inflation report |
22/05/2024 | 0600/0700 | *** | ![]() | UK | Producer Prices |
22/05/2024 | 0600/0700 | *** | ![]() | UK | Public Sector Finances |
22/05/2024 | 0600/0800 | ** | ![]() | SE | Unemployment |
22/05/2024 | 0805/1005 | ![]() | EU | ECB's Lagarde at ESMA event on effectiveness of capital markets | |
22/05/2024 | 0900/1000 | ** | ![]() | UK | Gilt Outright Auction Result |
22/05/2024 | 1100/0700 | ** | ![]() | US | MBA Weekly Applications Index |
22/05/2024 | 1245/1345 | ![]() | UK | BOE's Breeden Panellist on macroprudential policies | |
22/05/2024 | 1400/1000 | *** | ![]() | US | NAR existing home sales |
22/05/2024 | 1400/1000 | * | ![]() | US | Services Revenues |
22/05/2024 | 1430/1030 | ** | ![]() | US | DOE Weekly Crude Oil Stocks |
22/05/2024 | 1700/1300 | ** | ![]() | US | US Treasury Auction Result for 20 Year Bond |
22/05/2024 | 1800/1400 | *** | ![]() | US | FOMC Minutes |
23/05/2024 | 2300/0900 | *** | ![]() | AU | Judo Bank Flash Australia PMI |
23/05/2024 | 0030/0930 | ** | ![]() | JP | Jibun Bank Flash Japan PMI |
23/05/2024 | 0715/0915 | ** | ![]() | FR | S&P Global Services PMI (p) |
23/05/2024 | 0715/0915 | ** | ![]() | FR | S&P Global Manufacturing PMI (p) |
23/05/2024 | 0730/0930 | ** | ![]() | DE | S&P Global Services PMI (p) |
23/05/2024 | 0730/0930 | ** | ![]() | DE | S&P Global Manufacturing PMI (p) |
23/05/2024 | 0800/1000 | ** | ![]() | EU | S&P Global Services PMI (p) |
23/05/2024 | 0800/1000 | ** | ![]() | EU | S&P Global Manufacturing PMI (p) |
23/05/2024 | 0800/1000 | ** | ![]() | EU | S&P Global Composite PMI (p) |
23/05/2024 | 0830/0930 | *** | ![]() | UK | S&P Global Manufacturing PMI flash |
23/05/2024 | 0830/0930 | *** | ![]() | UK | S&P Global Services PMI flash |
23/05/2024 | 0830/0930 | *** | ![]() | UK | S&P Global Composite PMI flash |
23/05/2024 | 1000/0600 | *** | ![]() | TR | Turkey Benchmark Rate |
23/05/2024 | - | ![]() | EU | G7 Finance/CB Meet | |
23/05/2024 | 1230/0830 | *** | ![]() | US | Jobless Claims |
23/05/2024 | 1230/0830 | ** | ![]() | US | WASDE Weekly Import/Export |
23/05/2024 | 1345/0945 | *** | ![]() | US | S&P Global Manufacturing Index (Flash) |
23/05/2024 | 1345/0945 | *** | ![]() | US | S&P Global Services Index (flash) |
23/05/2024 | 1400/1600 | ** | ![]() | EU | Consumer Confidence Indicator (p) |
23/05/2024 | 1400/1000 | *** | ![]() | US | New Home Sales |
23/05/2024 | 1430/1030 | ** | ![]() | US | Natural Gas Stocks |
23/05/2024 | 1500/1100 | ** | ![]() | US | Kansas City Fed Manufacturing Index |
23/05/2024 | 1700/1300 | ** | ![]() | US | US Treasury Auction Result for TIPS 10 Year Note |
23/05/2024 | 1900/1500 | ![]() | US | Atlanta Fed's Raphael Bostic | |
24/05/2024 | 2301/0001 | ** | ![]() | UK | Gfk Monthly Consumer Confidence |
24/05/2024 | 2330/0830 | *** | ![]() | JP | CPI |
24/05/2024 | 0600/0700 | *** | ![]() | UK | Retail Sales |
24/05/2024 | 0600/0800 | *** | ![]() | DE | GDP (f) |
24/05/2024 | 0600/0800 | ** | ![]() | SE | PPI |
24/05/2024 | 0645/0845 | ** | ![]() | FR | Manufacturing Sentiment |
24/05/2024 | 0700/0900 | ** | ![]() | ES | PPI |
24/05/2024 | 0700/0900 | ![]() | EU | ECB's Schnabel speech at Germany PhD conference | |
24/05/2024 | 1230/0830 | * | ![]() | CA | Quarterly financial statistics for enterprises |
24/05/2024 | 1230/0830 | ** | ![]() | CA | Retail Trade |
24/05/2024 | 1230/0830 | ** | ![]() | US | Durable Goods New Orders |
24/05/2024 | 1335/0935 | ![]() | US | Fed Governor Christopher Waller | |
24/05/2024 | 1400/1000 | ** | ![]() | US | U. Mich. Survey of Consumers |
24/05/2024 | 1700/1300 | ** | ![]() | US | Baker Hughes Rig Count Overview - Weekly |