Week Ahead – Inflation and Recession Risks


While Europe appears at great risk for a recession as traders bet on aggressive rate rises by all the European central banks, the Fed is still expected to be nearing the end of their respective rate hiking campaign.  The focus in the US will fall on the PCE readings. If inflation comes down as expected, the swap futures might grow even more confident that the Fed will only deliver one more rate hike.  Wall Street will also pay close attention to the Conference Board’s consumer confidence reading, which is expected to show a modest rebound.  Friday’s Personal income and spending data will also be closely watched as incomes continue to grow, while spending softens.

Fed’s Williams speaks at the Bank for International Settlements on Sunday.  Fed Chair Powell heads to Europe and speaks at the ECB’s global banking forum in Portugal.  The Fed will also release the results of their annual banking stress tests.


There’ll be a lot of attention on ECB President Christine Lagarde’s appearances early in the week, particularly in light of what we’ve seen recently with central banks continuing to raise interest rates amid stubborn inflation. But it’s the flash HICP data on Friday that investors will be most interested in. The ECB recently warned that it will take a significant improvement in the data to avoid another rate hike next month and another repeat performance of the May report could be just that. Instead, we’re expected to see a small move in the other direction as base effects become less favourable for a couple of months, enabling the ECB to hike again in July before reassessing the situation in September. Inflation data from individual countries earlier in the week may offer some insight into what we can expect on Friday.


In light of the Bank of England decision to hike interest rates by 50 basis points last week, focus will be on what MPC members have to say. There’s been a lack of unity for months but that was increasingly evident at the June meeting. Going forward, the decisions aren’t going to get easier which means there’s likely to be less unity, rather than more. It won’t take many votes to pause the tightening cycle and so, despite the clear inflation problem, comments from MPC members will become increasingly scrutinized.


A few data releases on the agenda next week including unemployment, retail sales, industrial output and monthly GDP.

South Africa

A very quiet week with PPI the only notable release. Inflation is falling back towards target and the PPI may offer insight into whether those pressures are continuing to head in the right direction.


Thursday’s 6.5% rate hike suggests Turkey is on the path back to a conventional monetary policy approach. Markets were pricing in a lot more but with President Erdogan openly against hiking rates – despite replacing the Governor who was happy to cut on his behalf – the CBRT may be treading a little carefully. As we’ve seen before, Erdogan will not hesitate to sack a Governor so perhaps his new appointment simply has ambitions to still be employed in September. No major economic releases next week.


There are a few data releases next week, but SNB Chair Thomas Jordan’s appearance will probably be the highlight. The SNB hiked rates by 25 basis point this past week and markets believe there’s another in the pipeline. Jordan previously hinted at the neutral rate being 2% and the SNB indicated on Thursday that another hike may follow. With inflation forecast to stay above 2% for the next couple of years, only a drop in it over the next couple of months may change the SNBs mind.


Not much action on the economic data front with the only key data on manufacturing and services activities to digest.

On Friday, we will have the release of the NBS Manufacturing and Non-Manufacturing PMIs for June. Manufacturing PMI is forecasted to rebound slightly to 49.0 after it contracted to a five-month low of 48.8 in May.

In contrast, the growth trajectory of Non-Manufacturing PMI is forecasted to dip to 53.7 in June from 54.5 in May. If it turns out as expected, it will be the third consecutive month of a growth slowdown in services activities. These data will be closely watched to determine and gauge the next move from China’s top policymakers as market participants wait eagerly for the amount and scope of an impending new fiscal stimulus measure that the State Council stopped short of giving out any details about it last week.


A couple of key data to take note of on Friday; bank loan growth, Q1 current account where its deficit is forecasted to narrow to -$16 billion from $-18.2 billion recorded in Q4 2022, and Q1 external debt that is forecasted to edge lower to US$602 billion from $613.1 billion recorded in Q4 2022.


Two key data to focus on to gauge the next move on RBA’s monetary policy stance where it has reiterated its current tightening mode on last week’s release of RBA June meeting minutes.

On Wednesday, the monthly CPI Indicator for May is expected to come in at a slower growth rate of 6.1% year-on-year from 6.8% in April. If it turns out as expected, it will be the lowest level of inflation growth since March 2023.

On Thursday, preliminary retail sales for May is expected to show a growth of 0.1% month-on-month after zero growth recorded in April.

As of 23 June, the pricing on the ASX 30-day Interbank Cash Rate futures July contract has indicated a 32% chance of a 25-bps hike in the next RBA monetary policy meeting on 4th July 2023 to bring the cash rate up to 4.35%.

New Zealand

2 key data to focus on; Business Confidence for June out on Thursday where the forecast is calling for a slight improvement to -28 from -31.1 in May.

On Friday, Consumer Confidence for June is forecasted to dip to 77 from 79.2 recorded in May, if it turns out as expected, it will be the lowest level since December 2022.


Several key data to pay attention to. On Monday, the Bank of Japan (BoJ)’s Summary of Opinions. Retail sales for May will be released on Thursday where the consensus estimates are calling for a rebound to 5.4% year-on-year from 5% in April. Consumer confidence for June will also be released on the same day with an improvement to 38 being forecasted from 36 recorded in May. If it turns out as forecasted, it will be the 5th consecutive month of improvement in Japanese consumer sentiment.

Lastly, on Friday, we will have the all-important leading Tokyo area inflation data for June. Pay close attention to Tokyo’s core-core inflation rate (excluding fresh food & energy) that accelerated in May to 2.4% year-on-year, close to a 31-year high. If it continues to surge higher in June, it will run counter to BoJ’s latest guidance that has indicated that Japan’s inflation growth is at risk of a slowdown in the second half of the current fiscal year.


Industrial production for May will be released on Monday, a further deceleration is expected to -7.2% year-on-year from -6.9% printed in April. If it turns out as expected, it will mark eight consecutive months of contraction of industrial production given the slowing external demand environment.

On Thursday, we will have PPI for May for a further deflationary spiral in producers’ prices is being forecasted at -12.4% year-on-year from -11.4% in April.


Economic Calendar

Saturday, June 24

Economic Events:

  • ECB’s Schnabel participates in panel discussion at Petersberger Sommer-Dialog 2023.
  • Austrian Chancellor Nehammer and Italian PM Meloni speak at Europa Forum Wachau

Sunday, June 25

Economic Events:

  • Greece holds national elections.
  • New Zealand PM visits China to meet with President Xi Jinping
  • Fed’s Williams speaks at the Bank for International Settlements in Switzerland.

Monday, June 26

Economic Data/Events:

  • Germany IFO business climate
  • Israel unemployment
  • Singapore industrial production
  • Taiwan industrial production
  • ECB forum in Sintra, Portugal
  • SNB President Jordan speaks at Point Zero Forum in Zurich.
  • EU foreign affairs ministers meet in Luxembourg.
  • NATO Secretary General Stoltenberg meets Lithuanian President Nausėda in Vilnius
  • French finance minister Le Maire and German economy minister Habeck meet in Berlin.
  • Bank of Japan summary of opinions.

Tuesday, June 27

Economic Data/Events:

  • US new home sales, durable goods, Conference Board consumer confidence
  • Canada CPI
  • Mexico international reserves, trade
  • Taiwan jobless rate
  • China’s Premier Li Qiang speaks at The World Economic Forum’s Annual Meeting
  • ECB President Lagarde speaks in Sintra.
  • BOE’s policymaker Tenreyro is a panelist at ECB forum in Sintra on “Monetary policy in the face of multiple supply shocks.”

Wednesday, June 28

Economic Data/Events:

  • Australia monthly CPI
  • China industrial profits
  • Italy CPI
  • Russia unemployment, industrial production
  • US wholesale inventories, goods trade balance
  • Fed reveals results of annual banking industry stress test.
  • Policy panel with ECB’s Lagarde, Fed Chair Powell, BOJ’s Ueda and BOE’s Bailey at ECB bank forum in Sintra, Portugal.
  • BOE chief economist Pill on panel at ECB bank forum focused on macroeconomic forecasting.
  • ECB’s Villeroy speaks at Paris School of Economics conference.
  • ECB’s Enria makes an introductory statement at a hearing of the European Parliament’s economic and monetary affairs committee in Brussels.

Thursday, June 29

Economic Data/Events:

  • US Final Q1GDP report, initial jobless claims
  • Australia retail sales
  • Chile unemployment
  • Eurozone economic confidence, consumer confidence
  • Germany CPI
  • Japan retail sales
  • Spain CPI
  • Sweden rate decision: Expected to raise repo rate 25bs to 3.75%
  • The EU leaders summit opens in Brussels.
  • Fed’s Bostic speaks on the US economic outlook at Irish Association of Investment Managers dinner in Dublin.
  • BOE’s Tenreyro speaks at a Society of Professional Economists event in London
  • BOE’s Cleland gives keynote speech at Global Bank Payments Summit in Cape Town.

Friday, June 30

Economic Data/Events:

  • US May PCE deflator M/M: 0.1%e v 0.4% prior;; core PCE deflator M/M: 0.3%e v 0.4% prior, personal income and spending, University of Michigan consumer sentiment
  • Canada GDP
  • China June manufacturing PMI: 49.0e v 48.8 prior, non-manufacturing PMI, balance of payments
  • Czech Republic GDP
  • Eurozone June CPI M/M: 0.3%e v 0.0% prior; Core CPI Y/Y: 5.5%e v 5.3% prior, CPI Estimate Y/Y: 5.6%e v 6.1% prior, unemployment rate
  • France CPI
  • Germany unemployment
  • India fiscal deficit
  • Italy unemployment
  • Japan unemployment, industrial production, Tokyo CPI
  • Mexico unemployment
  • Poland CPI
  • South Africa trade balance
  • Thailand trade, balance of payments
  • UK GDP
  • Bank of Canada releases business outlook survey and survey of consumer expectations.

Sovereign Rating Updates:

–          None scheduled

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.

Ed Moya

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