What are the most important economic releases next week?

Monday

• Flash PMIs (Australia/Japan/France/Germany/Eurozone/UK/US)

The Flash PMIs will be the most important release of the week and will probably set the trend for the rest of the month. This is the most timely indicator we have on economic activity and traders will focus particularly on the inflation details.

The US Flash PMIs will be the most important. Hot data might lead to a more hawkish repricing in expectations given the Fed’s lack of conviction in looking through the tariffs impact as they did in 2018-2019.

Tuesday

The Canadian Trimmed Mean CPI, which is what the BoC is most focused on, bottomed around September 2024 and has been on a steady rise since then. In the last release, the data jumped to 3.1% Y/Y which is outside the BoC’s 1-3% target band (the mid-point is the target).

The market is pricing 23 bps of easing by year-end, so another 25 bps rate cut is almost fully priced in. Nonetheless, the central bank will likely remain on the sidelines for much longer if inflation continues to run this high, and that will lead to a hawkish repricing in market’s expectations.

Wednesday

• Australia Monthly CPI indicator

The Australian Monthly CPI indicator is going to be important for the RBA ahead of their policy meeting in July. The market is pricing 72 bps of easing by year-end with a 78% probability of a 25 bps cut at the upcoming meeting.

The central bank will likely want to see further inflation progress to continue with rate cuts. Data on the hotter side might see the market paring back such high expectations for a cut at the upcoming meeting.

Thursday

The US Jobless
Claims continue to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market. The Fed will need clear signals of a deterioration in the labour market to look through the expected pickup in inflation due to tariffs and deliver rate cuts. If the labour market remains resilient, the Fed won’t have any conviction to cut.

Initial Claims remain inside the 200K-260K range created since 2022 but Continuing Claims have been rising to new cycle highs more recently. There
are a few caveats though. The first one is that claims tend to rise in
the summer and the second one is that the recent Continuing Claims rise
is most likely due to workers having difficulty finding a job given the
economic uncertainty rather than increased layoffs.

Quick note:

We will also get the Final US Q1 GDP report on Thursday. I still see people caring about this useless lagging data. The GDP report is for economists, not traders. We are almost in Q3, who cares about Q1? Remember that markets move based on future expectations. In the last part of the Global Financial Crisis, when GDP was still showing negative figures, the market continued to rally because everyone was looking at better times ahead with all the government stimuli and so on. So, even if GDP is marked as “high impact” release on economic calendars, remember that how the calendars mark an economic release doesn’t mean anything.

Friday

• Tokyo Core CPI
• US Core PCE
• US Final UMich Consumer Sentiment

The Tokyo CPI data is more important than the National CPI because it’s a leading indicator and it comes out two weeks or so before the Japanese CPI. Remember that markets react more on fresh news, they are obsessed with the most recent information as they price or reprice future expectations.

For now, the higher inflation data hasn’t influenced much the market’s pricing for interest rates because the BoJ is fixated with the US-Japan trade deal. Nevertheless, at some point it could become too high to ignore.

The US Core PCE is the Fed’s preferred measure of inflation and it’s what they target. Nonetheless, the US CPI is generally the biggest market mover because you can reliably forecast the PCE using data from the CPI and the PPI. That’s why the PCE is generally a non market moving event. It’s kind of like the GDP release.

The US Final UMich Consumer Sentiment will likely be a non-event but a lower revision to the inflation expectations figures could support risk assets.