This Weekly Macro Outlook highlights the key economic data releases, central bank events & speeches, and macro themes shaping global markets for the week of June 1, 2026.
Key Focus This Week:
The key events for the w/c 2 February 2026: US Labor Market, Central Bank Meetings: RBA, BoE, and ECB, S&P Global PMIs Jan
Late last week, the impending change in Fed leadership came into sharp focus with the announcement of Kevin Warsh as the nominee to succeed Fed Chair Powell in May. Markets have begun to digest the implications of this change in Fed leadership for the policy outlook. The change is underscored by a Fed that remains in a delicate holding pattern; while the Jan FOMC meeting saw a second consecutive pause, two dissents highlighted the continued internal debate over the balance between labor market and inflation risks.
This leadership announcement arrived after the FOMC signalled a tactical shift in its assessment of the labor market. While the FOMC kept policy settings unchanged as expected, the decision was not unanimous. Governors Waller and Miran dissented, preferring another 25bps rate cut at this meeting. With policy rates now within a ‘plausible range of neutral’, the committee maintained that policy was “well positioned” to calibrate future adjustments, reinforcing market expectations of an extended hold here until the Jun meeting.
The decision to hold hinges on a subtle realignment of the balance of risks to the Fed’s mandate. The Fed now views activity as expanding at a “solid” pace and inflation as “elevated,” but crucially sees the labor market as “stabilizing.” Chair Powell acknowledged this delicate transition during the Q&A:
“I’d say that the upside—again, the upside risks to inflation and the downside risks to employment, have diminished. But they still exist. So there’s still some tension between the mandates. Are they fully in balance? Hard to say.” Fed Chair Powell,Press Conference Q&A 28 Jan 2026.
Governor Waller’s dissent highlighted the tension, as he argued that the labor market remains fundamentally weak, despite the ‘solid’ growth in economic activity. In his assessment, the labor market remains at significant risk of “substantial deterioration”.
Despite a firmer-than-expected PPI print for Dec, the broader inflation trend appears to remain contained. While headline PPI was unchanged at +3%, core PPI accelerated to +3.3% (expecting a slowdown to +2.9%). According to the updated Cleveland Fed PCE Nowcast, these PPI inputs suggest that core PCE likely increased by +2.84% over the year in Dec. This would remain largely consistent with the +2.8% core PCE print in Nov and sits slightly below Chair Powell’s expectation that Dec core PCE is likely to come in “around +3%”, also aligning with year-end Fed projections.
Meanwhile, the Atlanta Fed GDP nowcast for US GDP growth in Q4 slowed to +4.2% as the latest US trade data trimmed the large contribution from net exports. With the official advance Q4 GDP estimate to be released mid-Feb, the growth tracking remains elevated into year-end 2025.
The Bank of Canada remained on hold for the second consecutive meeting, noting that current settings were still “at about the right level” to support the economy through its structural adjustment. In a notable shift, the Bank described the timing and direction of the next move as “difficult to predict”, opting instead to remain nimble and preserve optionality in the face of uncertainty over the structural adjustment underway. While updated forecasts had not changed significantly from the Oct meeting, the upcoming review of the USMCA (trade agreement) was noted as a key risk in the outlook.
With markets continuing to digest the implications of the new Fed Chair nomination, the upcoming week brings a heavy slate of consequential data and central bank policy decisions.
US Labor Market (Jan) and Annual Benchmarking
The labor market remains a primary focus following the FOMC’s shift characterizing labor market conditions as “stabilizing”. Any deviation from this stabilizing trend could see a re-evaluation of the current ‘on hold’ stance before the Jun meeting.
US Growth and Fed speeches
Central Bank Decisions
Euro Area CPI – prelim Jan
The full suite of S&P Global PMIs for Jan will be released this week, providing the first view of private sector momentum at the start of 2026.
The Japanese parliametary elections will be held over the weekend on 8 Feb.
This week, the US Treasury will auction and settle approx. $751bn in ST Bills, Notes, FRNs, and Bonds, raising approx. $64bn in new money. Approx $28.5bn in ST Bills, Notes, and Bonds will mature on the Fed balance sheet and will be reinvested.
Finally, the latest quarterly refunding announcement will be made by the US Treasury this week.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
The key events shaping the w/c 3 November 2025: US labor market data for Oct, RBA & BoE meetings, PMIs for Oct.
While last week’s central bank decisions played out mostly as expected, the FOMC decision was the highlight. It introduced a notable shift in guidance for Dec and revealed an FOMC divided on the outlook. The Australian Q3 CPI was much higher than expected, with implications for the RBA meeting this week. Finally, the meeting and agreement between US President Trump and Chinese President Xi provided a more constructive geopolitical backdrop for now.
The FOMC cut by 25bps last week, with the decision remaining in the realm of a ‘risk management’ cut, given the rising downside risks to the labor market noted at the Sept meeting. The Fed also announced the end of QT next month. The Fed Chair continued to emphasize the challenging situation of “no risk-free path” as the Committee navigates the tension between its employment and inflation goals.
The key feature of this decision, however, was the division among Committee members. Firstly, the decision to cut was not unanimous, drawing two notable dissents – one member (Schmid) preferred no change at this meeting, while another (Miran) argued for a deeper 50bps cut. Secondly, according to Powell, “there were strongly differing views about how to proceed in Dec”, which led to a distinct shift in forward guidance. While markets had priced in a follow-up rate cut in Dec, Chair Powell explicitly countered that expectation:
“A further reduction in the policy rate at the December meeting is not a forgone conclusion—far from it.” – US Fed Chair Powell, Press Conference, 29 Oct 2025
This shift in guidance appeared to be more than just an attempt to maximize optionality for the Dec meeting. Rather, it reflected the range of views that leaned against the expectation for a continued rate cut in Dec. During the press conference, Powell outlined some of these arguments, including tentative signs that labor market conditions may be stabilizing, as well as members noting “stronger economic activity”. Given inflation is still above target, Powell noted that while the “reasonable base case” assumes tariffs will cause a one-off shift in the price level, many on the board are not simply assuming that will be the case. He also cited lingering data uncertainty stemming from the government shutdown as a reason to pause: “What do you do in a fog? You slow down.” Finally, an argument for slowing down the cadence of easing emerged, noting that the policy rate was 150bps closer to neutral than a year ago:
“And so there’s a growing chorus now of feeling like maybe this is where we should at least wait a cycle, something like that. That’s what it is.”- US Fed Chair Powell, Press Conference, 29 Oct 2025
The post-meeting commentary underscored the committee’s division. Several members outlined their differing views; Schmid (dissent), Logan, and Hammack preferred a hold; Waller still supports a cut in Dec; and Miran (dissent) likely still supports a 50bps cut in Dec. There are more speakers scheduled this week. Overall, the outcome of the Dec meeting will largely be determined by how the data and momentum, especially for the labor market, evolve over the next few weeks. Assessing this momentum remains challenging given the continued lack of official government data. This week, we will continue to rely on private sector reports, instead of the official government data, to assess the US labor market momentum in Oct.
The BoC cut rates at this meeting as expected, based on ongoing weakness in the economy, while inflation pressures remained ‘contained’. The BoC signalled a possible pause, though, with the Governing Council noting that “the current policy rate [is] at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment”. The BoC noted that the current economic weakness wasn’t just cyclical, but that trade and tariff changes were leading to a structural adjustment in the Canadian economy.
The domestic picture still poses a challenge for monetary policy. Like the ECB, the BoC noted that some uncertainty over trade and tariffs had receded – but that growth remained under pressure due to tariffs. In Sept, the unemployment rate remained high at 7.1% while headline inflation was +2.4%, slightly higher than the BoC anticipated. While the preferred measures of core inflation have been sticky around 3%, the “upward momentum had dissipated”.
The ECB kept policy settings unchanged as expected. The Governing Council noted that inflation is close to the 2% target, and the inflation outlook was broadly unchanged. Although the growth backdrop remained challenging, growth risks had abated. Past rate cuts were cited as an important source of resilience, with the ECB President stating that “Policy is still in a good place”. The ECB maintained its meeting-by-meeting approach to its assessment.
The broader Euro area continues to show resilience. The latest prelim GDP for Q3 was better than expected at +0.2%, boosted by some stronger country-level results despite political disruption in France, and the challenging manufacturing and trade backdrop facing Germany and the broader Eurozone manufacturing sector. Meanwhile, the latest prelim Oct CPI for the Euro area was little changed from Sep.
The BoJ kept rates unchanged as expected, maintaining its normalisation bias. However, the decision was marked by two dissenting votes preferring a rate hike. The dissenters cited “a shift away from the deflationary norm and the price stability target had been more or less achieved”, and “with risks to prices becoming more skewed to the upside, the Bank should set the policy interest rate a little closer to the neutral rate” as reasons for preferring to hike at this meeting.
On the outlook, Governor Ueda reiterated the need for patience, stating: “We held today as we want to see more data on domestic wage-setting behaviors, while uncertainty remains high in overseas economies. If we’re convinced, we’ll adjust rates regardless of the political situation.”
Via Bloomberg: Governor Ueda also made clear that the central bank does not need to see the full results of the wage talks before deciding. He repeatedly emphasized that the BoJ wants only to confirm the initial momentum of wage talks before adjusting policy—a signal that a rate hike may be closer than market reactions might suggest.
The focus shifts this week to the US labor market for Oct, several central bank decisions, and the full suite of Oct PMIs to assess growth momentum at the start of Q4.
Progress on the resolution of the US government shutdown will also remain in focus this week.
The geopolitical backdrop is expected to remain constructive for now, given positive meetings with US President Trump throughout Asia last week, as well as an agreement signed with Chinese President Xi. While the details of the agreement are limited, markets remain reassured with positive dialogue between the sides.
With the shutdown still in place, we continue to rely on private sector labor market reports (and central bank surveys) to assess momentum in the US labor market.
ISM & S&P PMI surveys for Oct will provide some further insight into changes in growth momentum.
Last week’s Q3 CPI came in higher than the already firmer expectations. Every category made a positive contribution to inflation in Q3. The trimmed mean and median measures of underlying inflation also increased notably compared to Q2, while not to the same degree as headline inflation, but still suggesting that it wasn’t just outliers driving the higher inflation in Q3. This will have implications for the RBA decision this week.
The full suite of global S&P PMIs for Oct will be released this week.
This week, the US Treasury will auction and settle approx. $532bn in ST Bills, raising approx. $42bn in new money. QT this week: Approx $13bn in ST Bills will mature on the Fed balance sheet and will be reinvested.
The US Treasury will also update its quarterly financing requirements for Q4 2025 and provide estimates for Q1 2026.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
After a period of elevated geopolitical anxieties, this week’s economic spotlight shifted firmly back onto the health of the US economy. Last week’s activity, spending, and inflation data for May provided a crucial snapshot of the growth trajectory and momentum of the US economy as firms and households adjust to the new tariff and policy regime.
Following a broad range of US economic data releases last week, the Atlanta Fed GDP nowcast growth run rate for Q2 saw a modest step down from +3.4% to +2.9% after the May data. This deceleration reflects a continued reduction in the contribution from personal spending, alongside a slightly larger drag from falling residential investment spending and from the change in inventories. These effects were only partially offset by a larger positive contribution from net exports, as tariff-led distortions on exports and imports continue to reset. Excluding the contributions from net exports and the change in private inventories, the proxy for domestic final sales slowed, edging from +1.7% growth to +1.6% (annualized over the quarter). The slowing momentum in Q2 comes on the back of Q1 GDP contracting at a slightly faster pace of -0.5%. This revision lower was led by slower/stalled growth in personal spending in Q1.
Drilling deeper into the drivers of this softening activity in May, last week’s data in particular sheds some light on a nuanced consumer landscape. While the underlying footing of labor market income for personal spending still looks solid, several headwinds, including subdued sentiment, could be dampening spending activity for now.
Consumer sentiment, as measured by both the Michigan and Conference Board surveys, has remained at subdued levels. Measures of consumer expectations for both the economic and inflation outlook have borne most of the negative brunt of not only this tariff episode, but also other policy measures such as government job cuts. While the recent easing of tariff rhetoric has brought some stabilization to the negative trends, still subdued sentiment indicates that consumers remain concerned about inflation, the labor market, and slowing growth, likely providing a negative backdrop for spending intentions.
Importantly, despite the fall in overall personal income this month, the income indicators reflecting labor market conditions remained solid in May. This suggests a still solid underlying footing for consumers and households. Headline personal income was softer than expected, falling by -0.4% in May versus +0.7% in April. The decline in May was primarily driven by two factors: a fall in proprietors’ income from the farm sector, which is relatively small share of overall income, but accounted for nearly 40% of the fall in aggregate income for the month, and a decline in transfer receipts after last month’s back-payment spike. Importantly, indicators reflecting labor market conditions remained solid in May. Wages and salaries growth remained at a solid +0.4% for the private sector, while wages and salaries growth slowed to +0.3% for the government sector, consistent with the slower growth in government payrolls flagged last month.
The recent increase in initial claims has raised concerns over a softening labor market, potentially impacting incomes. Last week, initial claims did ease, while continuing claims (lagging by a week) moved higher again, remaining above 1.9m and reflecting this slower hiring environment. We’ll get a more comprehensive update on the US labor market for June this week to see the degree to which this recent rise in claims and continuing claims is manifesting in unemployment and how that may impact the outlook for household spending and income.
The final piece of the puzzle was the more pervasive sign of slower consumer spending. In real terms, personal spending fell by -0.3% in May after a more subdued increase of +0.1% in April. While tariff distortions are visible in goods spending, we also noted slower growth in spending on services, which slowed to 0% in May – a slowing that was reflected across most services expenditure categories. It remains to be seen if this is temporary. There are, however, several headwinds to consumption growth that can’t be ignored, including slowing payrolls, led by government job cuts, notable uncertainty over the outlook/subdued sentiment, and falling immigration.
Looking at the latest survey data, the prelim US S&P PMI for Jun indicated that activity likely remained moderate in the final month of Q2. The composite output indicator suggested that activity continued to grow, though it did ease slightly. Falling exports across manufacturing and services acted as a drag on growth, but were offset by another round of (reportedly) tariff-led inventory building. Backlogs continued to increase, and firms expanded employment. Tariff-led price pressures persisted – the price indexes rose at an especially sharp and increased rate in manufacturing, but also continued to rise steeply in services.
This evolving economic backdrop, particularly the dynamics of slowing growth and cautious consumer activity, along with inflation concerns stemming from tariffs, remains central to the Fed’s policy considerations. While expectations of tariff effects on inflation are on the Fed’s radar, the latest PCE inflation report for May again showed little tariff impact so far. Headline PCE inflation came in as expected at +2.3% in May, while the rate in April was revised higher to +2.2%. Core PCE inflation came in higher than expected over the month at +0.2% and by +2.7% over the year, with the prior annual rate also revised higher. Core goods PCE inflation has stayed firmer year-to-date, while the overall slower monthly readings have been driven by an easing in core services inflation. Housing disinflation continues to progress consistently. Super core services excluding housing also showed signs of slowing, yet the annual rate remained unchanged at +3.1% (still below +3.5% from a year ago) in May.
Despite the more benign monthly inflation readings recently, the annual rates of PCE inflation have remained little changed, cycling over slower readings from a year ago. This will be important as we head into the June and July inflation readings. Fed Chair Powell’s testimony last week flagged that the June and July inflation reports would be important, as inflation impacts from tariffs were expected to begin to show up. Chair Powell noted he was open to the idea that these tariff effects could be less than anticipated, reiterating that a wide set of outcomes was still possible. He did not buy into the timing debate for when Fed rate cuts may restart, but did acknowledge that if inflation was weaker or if the labor market deteriorates, the Fed could cut rates sooner. Chair Powell stated there was a case to cut rates now, but emphasized that data is backward-looking and expectations for inflation to move higher due to tariffs cannot be ignored. So far, markets are pricing in two, with a possible third rate cut in the second half of this year (source: CME Fed Watch).
Outside of the US, the suite of prelim PMIs showed that activity stabilized across both manufacturing and services sectors in Jun. While there was a broad, modest uptick in overall economic activity (largely service-led), the global picture remains one of heightened uncertainty driven by geopolitical tensions and tariff policies, which are impacting exports and causing inflation trends to diverge (price spikes in the US due to tariffs, but moderation elsewhere). The labor market generally reflects this cautious outlook, with either slowing job creation or outright cuts in some regions.
The week ahead will feature a broad range of important US economic reports, including the crucial payrolls and labor market data for June, the full suite of global PMIs for June, and the ECB Forum on Central Banking. The passage of the US budget reconciliation bill – the One Big, Beautiful, Bill Act – is expected to be completed this week and signed in time for the Independence Day Holiday deadline on July 4. News of progress on trade deals is expected to increase as the July 9 reciprocal tariff deadline approaches.
A broad update on the US labor market for June. This is important given the recent weakening in the initial claims data, as well as what it may mean for a softer spending outlook. NOTE that the key labor market data will be released a day earlier than usual on Thurs, 3 July.
US economic activity reports will be important for gauging momentum into the final month of Q2.
ECB Forum on Central Banking – Sintra
Europe
The broader suite of global S&P PMIs for Jun will be released this week.
This week, the US Treasury will auction and/or settle approx. $652bn in ST Bills, Notes, Bonds, and TIPS, raising approx. $121bn in new money. Of this amount, only $5bn in new money will fall into Q3.
The US Treasury announced the first of a series of Cash Management Bills (CMB) to manage debt limit-related constraints. Starting this week, the US Treasury expects to issue a series of CMBs for up to $250bn in aggregate, to mature in the second half of Sep 25. More details HERE.
QT this week: Approx $36bn of ST Bills, Notes, and Bonds will mature on the Fed balance sheet and will be reinvested. Approx $4.6bn in Notes and Bonds will mature on the Fed balance sheet and be redeemed.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
As we approach the next FOMC meeting on 18-19 Mar, the US economic landscape continues to evolve. Data last week showed encouraging signs of slowing underlying inflation in Jan, yet simultaneously cast doubt on the narrative of the robust economic expansion, a concern currently based on limited hard data. This week, we add the critical US labor market component for Feb to our analysis as we build a more comprehensive view ahead of the Fed’s upcoming decision.
At its last meeting, the FOMC maintained its policy stance, citing the need for further disinflation progress before considering rate cuts, supported by a solid labor market and economy. The Jan PCE inflation data showed encouraging signs of progress on disinflation, coming in below expectations. Core PCE inflation slowed to +2.65% over the year, a step down from +2.9% in Dec, and below the +2.8% rate where it seemed to stall through late 2024. Seasonality was a key consideration in this report and importantly, monthly inflation data moderated compared to the higher figures of a year ago. This is a development that is likely to be welcomed by the FOMC. While core goods inflation remained relatively firm, core services inflation, a key area of concern, showed signs of easing. Specifically, core services inflation slowed to +3.4%, and core services excluding housing also slowed to +3.1%. Despite these positive developments and the general progress on disinflation, short-term annualized rates suggest that further disinflation may proceed at a more gradual pace.
However, the elevated inflation rate at the end of 2024 was not the only concern on the inflation front for the FOMC. The Committee was also worried about the upside risks to the inflation outlook from the potential impact of tariffs and changes to immigration policy. The uncertainty around policy has yet to be resolved, so this may still weigh on the FOMC decision.
Beyond policy concerns, the data may already be reflecting potential tariff-related pressures, clouding the economic outlook. The threat of tariffs appears to coincide with two developments. The first is the emergence of rising cost pressures observed in the US S&P prelim PMI report for Feb and now also across the regional manufacturing surveys for Feb, suggesting that price increases on raw materials became more widespread in Feb (including the Dallas, Kansas, Empire State, and Philadelphia Fed manufacturing surveys for Feb).
The second was the notable step down in the US growth outlook for Q1. The Atlanta Fed GDP nowcast for Q1 GDP growth shifted sharply lower from +2.3% growth at the start of the week to a -1.5% contraction by the end of the week. The key driver of that decline was the increase in the goods trade deficit led mostly by a +32% increase in imports of industrial supplies for the month – possibly reflecting orders to front-run potential tariff price increases.
However, the fall in personal spending for Jan also contributed to the weaker growth outlook. While this fall was expected based on the Jan retail sales results, it does raise some uncertainty over the outlook for consumption growth. So far, it’s one month of weaker consumption spending and comes off the back of four months of much stronger growth leading into the end of 2024. Personal income growth was stronger than expected in Jan, led higher (in nominal terms) by cost-of-living adjustments on transfer payments, but labor income growth also remained stable.
Given the uncertainty over the growth outlook and some improvement on inflation progress, markets are now pricing in almost three rate cuts this year (at the time of writing), with cuts to resume in Jun (Source: CME FedWatch).
Given this uncertain US growth backdrop, the US labor market data for Feb, and what it means for income and growth, will be crucial for understanding the evolving economic backdrop. Ahead of the blackout period next week, there are also several key Fed speeches which will provide some context for how Fed members are thinking about the economic outlook.
US labor market conditions in Feb
US data releases this week will primarily focus on production for Jan and Feb with a combination of hard and survey data.
The final US Fed speeches before the blackout period next week, ahead of the FOMC meeting on 18-19 Mar.
The ECB is expected to cut rates this week;
Data outside of the US;
The full suite of S&P global PMIs for Feb will be released this week.
Further news on tariffs for China, Canada, and Mexico is expected this week – and headline risk remains elevated.
At the same time, the Chinese National People’s Congress will take place in Beijing this week – and stimulus measures are expected to be announced together with the key economic targets for the year (source: Bloomberg 3 Mar 2025).
This week, the US Treasury will auction and/or settle approx. $469bn in ST Bills, with a net paydown of -$6bn.
QT this week: Approx $2.4bn of ST Bills will mature on the Fed balance sheet and will be reinvested.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
