Below are the most important global events likely to affect FX and bond markets in the coming week starting May 27.

Focus this week will center on U.S. PCE inflation data on May 31 as uncertainty remains over when the Federal Reserve will start cutting interest rates, while eurozone inflation figures will be scrutinized ahead of an expected interest-rate cut by the European Central Bank next month.

Public holidays in the U.S. and U.K. on Monday could mean a slow start to the week, however.

First-quarter gross domestic product data are due in Canada, while South Africa faces general elections and a central-bank decision.

In Asia, China's PMI surveys, a slew of data in Japan and Australia's inflation readings are in focus. New Zealand sets out its budget amid concerns about stubborn inflation and sluggish growth, while India's GDP figures will likely show that the economy has stayed resilient.

Trade data from South Korea will be watched to see if export momentum has continued, while Taiwan's final first-quarter GDP print is expected to confirm the island economy's positive performance at the start of the year.


U.S.


Recently released minutes to the latest Federal Reserve meeting showed officials concluded that they would need to hold interest rates at their current level for longer than they previously anticipated after three straight months with inflation remaining high and failing to fall as much as expected. Some officials were even open to raising rates if inflation re-accelerated.

Financial markets have scaled back expectations for U.S. interest-rate cuts in 2024 significantly, from six at the start of the year to just one or two now, but they remain convinced that an easing of policy is coming all the same, analysts at AJ Bell said in a note.

In that context, upcoming data will be key and May 31's U.S. personal consumption expenditure index for April--the Fed's preferred measure of inflation--will be particularly closely scrutinized after a strong reading in March.

"Given the U.S. central bank's position that it is 'data dependent,' both policymakers and investors will be looking for a cooling and a more benign reading this time around," AJ Bell analysts said.

Ahead of that, Tuesday's U.S. Conference Board consumer confidence index for May could give an indication of whether or not the U.S. economy has remained strong this month. The second estimate of first-quarter U.S. gross domestic product is due on Thursday, alongside weekly jobless claims, while the Case-Shiller house-price index for March is due on Tuesday, followed by the Fed's 'Beige Book' economic report on Wednesday and Chicago PMI for May on May 31.

The U.S. will auction two- and five-year Treasury notes on Tuesday and seven-year notes on Wednesday for a combined offer volume of $183 billion.

U.S. markets are closed for a public holiday on Monday.


CANADA


First-quarter gross domestic product data for Canada are due on May 31.

Analysts at Citi expect that the Bank of Canada will cut interest rates in July but any weakness in upcoming data, including the GDP data, "could make a June cut more likely," they said in a note.


EUROZONE


Eurozone inflation data due in the coming week will be closely watched ahead of a widely expected interest-rate cut by the European Central Bank in June.

What has become less certain is the outlook for interest rates beyond June, particularly after recent evidence of an improving eurozone economy and higher-than-expected wage growth.

"In view of the continued significant rise in wages, especially in the service sector, the price pressure in this area is unlikely to ease for the time being," said Robert Greil, chief strategist at Merck Finck in a note.

Eurozone flash inflation figures for May are due on May 31, with figures for Germany released ahead of that on Wednesday and for Spain on Thursday.

A "small uptick" from April's 2.4% rate of eurozone inflation looks possible, but this is unlikely to dissuade the ECB from cutting rates in June, economists at Investec said in a note.

Recent stronger-than-expected provisional eurozone purchasing managers' index data for May suggest the economy is picking up, however, meaning any rate cuts beyond June could be slow, analysts say.

Germany's Ifo business climate survey for May on Monday will be watched to see if the stronger trend evident from the PMI figures is again reflected here.

"Following the renewed rise in purchasing managers' indices, German companies are likely to have appeared more optimistic in the Ifo survey for the fourth month in a row," Merck Finck's Greil said.

Other data include eurozone business and consumer surveys for May on Thursday; and the GfK German consumer climate survey and France's consumer confidence survey on Wednesday. Eurozone money supply data for April are released on Wednesday.

Germany and Italy will conduct two auctions each next week; while other issuers include Belgium on Monday and the Netherlands on Tuesday.

On Tuesday, Germany will sell 2 billion euros ($2.16 billion) 2029- and 2033-dated green government bonds and on Wednesday it will auction EUR2 billion in 2038- and 2041-dated Bunds. Italy's bond auctions are scheduled for Tuesday and Thursday.


U.K.


Attention returns to U.K. politics after Prime Minister Rishi Sunak's recent surprise announcement that a general election will be held on July 4.

At the same time, the Bank of England now looks unlikely to cut interest rates in June after the latest data showed U.K. inflation fell less than expected. Money markets now assign only a 7.5% chance of a June rate cut, according to Refinitiv data.

This week will see only secondary data, with mortgage and consumer lending data for April due on May 31, alongside the Nationwide house price index for May. The CBI's distributive trades survey for May on Tuesday will give an indication of the health of the retail sector.

Investors will look for indications on the health of the U.K. economy and whether a rate cut can be expected in August.

The U.K. Debt Management Office plans to sell 1 billion pounds ($1.27 billion) in a March 2039 index-linked gilt on Wednesday.

U.K. markets are closed for a public holiday on Monday.


SCANDINAVIA


Sweden's Riksbank became only the second major developed central bank to start cutting interest rates recently and focus now turns to when rates will be cut again and by how much.

First-quarter gross domestic product data on Thursday, alongside consumer confidence figures for May, will be watched closely for evidence on the health of Sweden's economy, which has performed poorly of late.

Swedish April trade data are due on Tuesday and retail sales for April on Wednesday.

Norway will release Labour Force Survey unemployment data for April on Monday.

Norway will conduct a bond auction on Wednesday. Sweden's National Debt Office will tap inflation-linked bonds on Thursday and it will also publish the next borrowing forecast.


SOUTH AFRICA


South Africa heads to the polls for general elections on Wednesday, while on Thursday the country's central bank announces a rate decision.

"SARB [South African Reserve Bank] officials will be keeping a close eye on fiscal risks around the upcoming election," said Jason Tuvey, deputy chief emerging markets economist at Capital Economics in a note.

"We don't expect any interest rate cuts this year. Our view would be reinforced further if the SARB's inflation target is lowered, as has been reported, after the election," he said.


JAPAN


Japan's usual end-of-month data flood lands on May 31, featuring Tokyo inflation for May, as well as retail sales, industrial production and jobs data for April.

The data will be watched for clues on the Bank of Japan's policy path amid growing expectations over additional interest-rate increases. The latest inflation print showed that consumer price growth slowed in April, but remained above the central bank's 2% target.

Economists say inflation will likely pick up pace again if the yen remains weak because it means Japanese people have to pay more for imported food and energy. A weaker yen also has effects such as lowering real wages due to higher import prices and increasing production costs for companies using imported intermediate goods.

While this year's spring wage negotiations should deliver real wage growth in the second half of 2024, Moody's Analytics economist Jeemin Bang said wage data has been wobbly, challenging the notion that salary increases will translate into economy-wide wage growth.

"This complicates the outlook for the Bank of Japan as it looks to raise interest rates," Bang said.

Markets will continue to keep a close eye on any remarks from BOJ officials, with Governor Kazuo Ueda and Deputy Governor Shinichi Uchida scheduled to speak at a conference on Monday and policy board member Seiji Adachi due to speak at a meeting with local leaders in Kumamoto, Japan, on Wednesday.


CHINA


The main event in China is PMI prints for May due May 31, which will indicate how the economy is doing in the second quarter of the year.

Recent data has painted a mixed picture of China's economy, suggesting that the recovery remains fragile and uneven. Solid readings from the official PMI gauges would buoy optimism that policymakers' efforts to revive growth are paying off.

The PMIs will likely show that factory activity continued growing, while services and construction activity might have slowed.

Barclays economists expect the manufacturing PMI to stay relatively flat from April, as operational rates in the mining & smelting and chemical sectors improved, while those in textile and auto fell.

China also reports industrial profit data for April on Monday.


AUSTRALIA


In Australia, bond traders will await the release of retail sales data for April on Tuesday.

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05-24-24 0905ET