Below are the most important global events likely to affect FX and bond markets in the week starting May 26.
Further developments in U.S. trade talks will remain in focus after President Trump threatened 50% tariffs on goods from the European Union from June 1, reigniting fears of a global trade war.
Key economic data in the coming week include U.S. PCE inflation figures and consumer confidence data, alongside Federal Reserve minutes. In Europe, provisional inflation data for May are released in several eurozone countries, while Tokyo inflation data and rate decisions in New Zealand and South Korea will provide the focus in Asia.
Investors will continue to watch bond yields. Long-dated Treasury yields rose sharply after Moody’s downgraded the U.S. and on concerns about Trump’s tax and spending bill, which recently passed through the House and is expected to raise the deficit even further.
U.S.
Trump’s threat of hefty tariffs on EU goods will raise further fears about high U.S. inflation and weak economic growth.
“Escalation, de-escalation and now re-escalation of President Trump’s war on trade is going to be the theme that drives markets,” said ING economist James Knightley in a note.
“The prospect of 50% tariffs on EU imports into the U.S. from 1 June along with tech and pharma companies increasingly being the focus of his ire means fears of large price hikes and weaker economic activity need to be priced by financial markets.”
Key data include U.S. PCE inflation data–the Fed’s preferred inflation measure–for April on Friday, as well as the Conference Board consumer confidence index for May and the second estimate of first-quarter gross domestic product on Thursday.
Tuesday’s durable goods orders for April could attract more attention than usual for indications on the impact of tariffs.
“Boeing recorded 8 aircraft orders in April, down from 192 in March and this will drag durable goods orders sharply lower,” Knightley said.
The Federal Reserve’s minutes on Wednesday will be watched for details on policymakers’ discussions at their latest meeting. The Fed signalled that rate cuts were unlikely for now given risks to inflation but nonetheless policymakers remain concerned about the damage tariffs could do to the economy.
Other data include the Case-Shiller home price index for March on Tuesday and weekly jobless claims Thursday.
Focus will also center on upcoming Treasury auctions after recent poor demand at an auction of 20-year Treasurys and a rise in the 30-year yield to its highest in more than 18 months.
Auctions in the coming week are all of short- and medium-dated Treasurys, however, where demand is likely to be better than for longer-dated bonds.
$69 billion in two-year notes will be up for auction on Tuesday, $70 billion in five-year notes on Wednesday and $44 billion in seven-year notes on Thursday. In addition, $28 billion in two-year floating rate notes will be offered on Wednesday.
Monday is a public holiday in the U.S.
CANADA
Canadian gross domestic product data for March are due Friday amid concerns about the health of the economy. Signs of a worsening economic outlook would likely add to speculation that the Bank of Canada could resume interest-rate cuts in the coming months.
EUROZONE
Analysts expect that Trump’s tariff threat is likely to intensify trade talks. It could also result in retaliatory measures from Europe.
If tariffs were implemented as currently proposed it could result in a substantial fall in German GDP, with an even worse hit to Ireland if pharmaceuticals were included, Capital Economics said in a note.
In terms of upcoming data, Spain’s producer price index on Monday and Germany’s GfK consumer climate survey kick off the usual end-of-month data flurry.
“In Germany, the moderate recovery in the GfK consumer climate is likely to continue,” DZ Bank analysts said in a note. “Falling inflation rates and wage increases are improving sentiment slightly, but major leaps are unlikely due to international uncertainties.”
Provisional inflation figures for May are due from France on Tuesday, then from Germany, Spain and Italy on Friday.
“The German inflation rate (HICP) is likely to continue to approach the 2% mark in May,” DZ Bank analysts said.
“While price pressure is expected to ease slightly at most in the service sector, energy prices are likely to fall significantly again year-on-year,” they said, attributing this to the continuing low oil prices.
Tuesday will also see the release of EU business and consumer surveys. French consumer spending, first-quarter final GDP and job creation, as well as German unemployment data will come on Wednesday. A string of Italian data are due Thursday, such as consumer and business confidence surveys, and industrial turnover, along with Spanish retail sales.
Italian first-quarter GDP data are due Friday.
Italy will hold bond auctions on Tuesday and Thursday, nominal and inflation-linked bonds on Tuesday, as well as nominal bonds and floating rate notes on Thursday. In addition, Italy will also offer a new issue of BTP Italia, a bond indexed to Italian inflation and designed mainly, but not exclusively, for retail investors. Subscriptions will run May 27-30.
?Other issuers include the Netherlands on Tuesday and Germany selling 2038- and 2040-dated Bunds on Wednesday.
Thursday is a public holiday in Germany and France.
U.K.
The coming week will be quiet in the U.K. The British Retail Consortium’s shop price index for May is released Tuesday, while Nationwide’s May house price index is due during the week.
The U.K. plans to sell July 2033 green gilts on Wednesday.
Monday is a public holiday in the U.K.
SCANDINAVIA
Swedish retail sales data are due Wednesday, followed by first-quarter Swedish gross domestic product figures on Friday.
Norway plans to hold an auction on Wednesday.
SOUTH AFRICA
South Africa’s central bank announces a rate decision on Thursday.
Citi analysts expect that interest rates will be cut by 25 basis points to 7.25% due to the prospect of falling inflation.
HUNGARY
Hungary announces an interest-rate decision on Tuesday. Interest rates are expected to be kept on hold at 6.50% due to recent evidence of high inflation, even as the economic outlook deteriorates, ING economist Peter Virovacz said in a note.
AUSTRALIA/NEW ZEALAND
The Reserve Bank of New Zealand will be in focus on Wednesday, with economists expecting a 25 basis-point cut to the official cash rate.
Investors will closely scrutinize the RBNZ’s guidance, especially following the Reserve Bank of Australia’s recent rate cut amid a dovish pivot that included discussion of a 50 basis-point reduction. The RBA is clearly concerned that the trade war could escalate again, and the RBNZ may adopt a similarly cautious tone.
In Australia, RBA Governor Michele Bullock will travel to China for meetings. While she is unlikely to reveal the content or tone of those talks, the visit perhaps underscores Australia’s vulnerability should China’s economy slow due to tariffs on its exports.
Still, the RBA’s recent commentary on China has been upbeat, with forecasts suggesting that Beijing will be able to stoke growth and meet its economic targets.
The release of Australia’s monthly inflation indicator for April is also on the radar. However, inflation fears have recently receded, with the RBA forecasting that price pressures will remain contained over the coming year.
CHINA
With no major economic data scheduled, attention turns to China’s trade talks with the U.S.
Diplomatic communications have continued, with U.S. Deputy Secretary of State Christopher Landau speaking with Chinese Executive Vice Foreign Minister Ma Zhaoxu on Thursday.
State Department Spokesperson Tammy Bruce said the officials “acknowledged the importance of the bilateral relationship to the people of both countries and the world, discussed a wide range of issues of mutual interest, and agreed on the importance of keeping open lines of communication.”
Industrial profit data due Monday will offer insight into whether the momentum from recent stimulus measures carried over into April. Corporate earnings returned to growth in the first quarter, and markets will be looking for confirmation that the recovery is continuing into the second quarter.
INDIA
India will report gross domestic product data for the January-March quarter on Friday. Economists expect a sequential pickup in activity, but growth is likely to remain below trend and fall short of government targets, according to ANZ Research, which argues this strengthens the case for further monetary easing.
Given persistent external risks, attention has turned to domestic factors, including a continued rural recovery, ANZ said. While recent progress in U.S.-China negotiations may lessen the impact of global trade tensions, it remains difficult to isolate the effects of tariffs on external demand.
With inflation not a concern for now, ANZ expects the Reserve Bank of India to cut rates three more times this year, bringing the repo rate to 5.25% by year-end. It projects GDP growth at 6.8% for the January-March period, up from 6.2% in the prior period.
“[The] RBI has made a grand opening to the policy easing cycle,” said Rahul Bajoria of BofA Securities India. He said the GDP print will likely reflect a gradual economic recovery. With inflation below the central bank’s target, a suboptimal growth and weak investment outlook, this sets the stage for further rate cuts, Bajoria said, adding that aggressive cuts are unlikely for now.
Analysts are also watching trade talks between the U.S. and India. In a recent report, the RBI said India’s economy seems to be in shape to withstand the headwinds posed by trade policy shifts.
JAPAN
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05-25-25 1714ET
