A slow start to the week is expected, with a bank holiday in the U.K. for the observance of Spring Bank Holiday, and in the U.S. for Memorial Day.
On Tuesday, Japan will release the BoJ Core CPI y/y, while in the U.S., we will get the durable goods orders m/m and CB consumer confidence.
Wednesday will bring inflation data for Australia, with the main focus on the RBNZ monetary policy announcement. In the U.S., the FOMC meeting minutes will be released.
Thursday, many countries will observe Ascension Day, leading to lighter market activity. In the U.S., we’ll get the release of preliminary GDP q/q and unemployment claims.
On Friday, Japan will release the Tokyo Core CPI y/y, Canada will report GDP m/m, and the U.S. will release the core PCE price index m/m.
The consensus for U.S. durable goods orders m/m is -7.9% vs. the prior 7.5%, and for core durable goods orders m/m, -0.1% vs. the prior -0.4%.
Wells Fargo analysts note that the previous jump in durable goods orders was primarily driven by a $23 billion (157%) surge in nondefense aircraft orders. There was also a rise in auto orders, likely in anticipation of tariffs. Overall, the trend remains weak. Excluding transportation, orders declined by 0.4%, while core capital goods orders slipped by 0.2%.
This month, expectations point to weakness in headline orders, which can be attributed to high borrowing costs and uncertainty related to trade policy.
In the U.S., the consensus for the CB consumer confidence index is 87.1, up from the prior 86.0.
Recently, consumer confidence has declined to levels approaching those seen during the pandemic, reflecting growing concerns about the economic outlook. However, a rebound is expected in this week’s data, likely driven by temporary relief following the 90-day pause on elevated tariffs targeting China.
In Australia, the consensus for the CPI y/y is 2.3% vs. the prior 2.4%. Westpac expects Australia’s April monthly CPI indicator to rise by 0.3%, which would bring the annual inflation rate down to 1.9%. This follows a 0.6% increase in March that kept the yearly rate steady at 2.4%.
April marks the first month of the quarter and primarily captures quarterly price changes in goods such as clothing, furniture, and home maintenance. More comprehensive data on prices for services will be available in the coming months.
At this week’s meeting, the RBNZ is expected to deliver a 25 bps rate cut and to lower its forecast for the OCR by around 20 bps to 2.9% by the end of the year, reflecting a more gradual easing path.
Looking ahead, the RBNZ is expected to adopt a data-dependent approach, with the possibility of pausing rate cuts in July depending on economic conditions, according to Westpac.
The Monetary Policy Committee is likely engaged in increased debate, particularly around balancing near-term inflation pressures with a softer medium-term outlook. Global economic developments will remain a key factor, with both downside and upside risks under consideration.
The consensus for the Tokyo core CPI y/y is 3.5% vs. the prior 3.4%. Japan is expected to experience persistent inflationary pressure alongside a slowdown in manufacturing activity, which can be attributed to U.S. tariffs.
Analysts at ING emphasize that consumer price inflation in Tokyo is likely to remain elevated, with a slight increase in core inflation suggesting broad-based price pressures. At the same time, industrial production is forecast to decline, influenced by the impact of 25% tariffs on automobiles. This will complicate the Bank of Japan’s future policy considerations.
In the U.S., the consensus for the core PCE price index m/m is 0.1% vs. the prior 0.0%; for personal income m/m, it is 0.3% vs. the prior 0.5%; and for personal spending m/m, 0.2% vs. the prior 0.7%.
Wells Fargo analysts note that March’s notable increase in consumer spending of 0.7% was primarily fueled by a substantial uptick in purchases of motor vehicles and parts. This surge, totaling $57 billion, reflected consumers’ efforts to buy before impending tariffs took effect, and it significantly outpaced growth in other spending categories.
Beyond autos, spending on services also gained momentum. Increases were seen in both necessary expenses like healthcare and more optional categories such as travel and dining, indicating that, despite concerns around inflation and falling consumer confidence, demand for leisure and service-related spending remains relatively resilient.
This elevated level of consumption has been underpinned by strong income performance. Real disposable income climbed 0.5% in March—the largest monthly gain in over a year—supported by consistent wage growth and stable inflation. Both core and headline PCE inflation remained unchanged month-over-month, keeping annual rates steady at 2.3% and 2.6%, respectively.
In Canada, the consensus for GDP m/m is 0.2%, compared to the prior -0.2%. Canada’s GDP is expected to have grown at an annualized rate of 1.8% in the first quarter, driven primarily by a strong performance in January.
February likely weighed on the quarter’s momentum, as the conclusion of the federal GST tax holiday, compounded by harsh winter conditions and persistent trade-related uncertainty, led to a temporary pullback in activity. However, March appears to have brought a partial recovery, driven by improved output in the transportation sector and a rebound in oil production.
Household consumption is expected to have increased in Q1, although slower home resale activity likely curbed residential investment. Business investment may have edged higher, but the outlook remains clouded by ongoing trade policy disruptions that could dampen future capital spending.
According to RBC analysts, the next round of data, including updates on manufacturing and wholesale trade as well as early estimates for Q2 GDP, will be critical in determining whether recent signs of weakness are temporary or part of a broader slowdown. Housing activity remains soft, and the manufacturing industry has seen significant job cuts, underscoring growing pressure in key sectors.
Still, retail spending has held up well despite declining consumer sentiment, helped by strong cardholder activity and a relatively stable perception of current business conditions. Canada continues to benefit from the lowest U.S. tariff exposure among major trading partners, following exemptions granted in April. Meanwhile, job postings data from early May suggest that some stability is returning to the labor market.
While overall economic momentum is expected to cool this year, a contraction remains unlikely as domestic demand helps cushion the impact of external trade headwinds.
