by Kim | May 11, 2026
This weekly macro outlook highlights the key economic data releases, central bank events & speeches, and macro themes shaping global markets for the week of May 11, 2026.
Key Focus This Week:
- Central banks: Fed Chair Powell’s term ends on 15 May, Senate confirmation of Kevin Warsh TBC this week
- Major data: US inflation, consumption, & output – CPI, PPI, Retail Sales, & Industrial Production Apr
- Key themes: Geopolitical headline risks: US-Iran ceasefire deal, President Trump & President Xi Summit 14-15 May
(more…)
by Kim | Oct 20, 2025
The key events shaping the w/c 20 October 2025: US CPI for Sep, global inflation reports for Sep (NZ, the UK, Canada, and Japan), S&P prelim PMIs for Oct
Recap from last week: Fed Easing with Caution
Amid the ongoing US government shutdown and data vacuum, focus remained on key Fed speeches in the lead-up to next week’s FOMC meeting. The message from those speeches was clear: easing with caution. The latest Beige Book provided a broad update on the US backdrop, detailing slower growth, muted labor market conditions, and persistent input price inflation. The release of the US CPI report for Sep this week will provide the Fed with an important update on inflation. Globally, the market will receive Sep inflation updates from NZ, the UK, Japan, and Canada.
Speeches by Fed Chair Powell and Fed Governor Waller last week supported another rate cut at the FOMC meeting next week. The Fed Chair noted that, despite the lack of official data, and based on the data available, the outlook for employment and inflation hasn’t changed much since the last meeting. In other words, the balance of risks still reflects the rising downside risks to the labor market. He noted, though, that economic activity may be on a somewhat firmer trajectory than expected. The first half of Chair Powell’s speech focused on the Fed’s balance sheet. Chair Powell acknowledged that the end of Quantitative Tightening (QT)/balance sheet run-off may be approaching “in coming months”, given the level of total reserves in the system, and emerging signs that “liquidity conditions are gradually tightening”. It was a timely speech on liquidity conditions, given the recent, yet temporary pressures in short-term funding markets, and could signal an earlier end to QT.
In his speech, Governor Waller noted the backdrop of conflicting data: solid growth in activity while the labor market is softening. It’s a situation where “something’s got to give”. Until it’s clear which way the data will break (in favour of stronger growth or a weaker labor market), Governor Waller advocated for a cautious pace of cuts to avoid a policy mistake.
The Fed Beige Book for the six weeks to mid-Oct showed some easing in the pace of economic activity, continued subdued hiring, and stable employment, as prices continued to rise. While the report noted that economic activity had “changed little” from the previous report, fewer regions had reported either no change in activity or increasing activity, and more regions reported a “slight softening” in activity. Consumer spending “inched down,” manufacturing activity was “varied,” and activity in agriculture, energy, and transportation was “generally down”. The report showed differing effects among high and lower/medium income cohorts, with spending on “luxury travel and accommodation” reportedly strong, while other households “continued to seek discounts and promotions in the face of rising prices and elevated economic uncertainty”.
Employment levels were “largely stable”, while demand for labor remained muted. In some cases, hiring was replaced by “layoffs and attrition” due to weaker demand, elevated economic uncertainty, and investment in AI technologies.
Prices increased further due to higher import costs (tariffs) across many districts as well as higher costs of services. Tariffs seemed to have a dual impact of a growth drag on manufacturing and of driving higher input price inflation. There were mixed reports between firms absorbing the higher tariff costs via lower margins and firms passing on the higher costs.
The Beige Book still confirms the challenging and delicate path for the Fed to navigate, the “no risk-free path”. However, the softening in growth and continued muted labor market conditions will still play into the rising downside risks, supporting an easing bias. With the inflation backdrop remaining persistent, this week’s US CPI report for Sep will offer an important view of the path of inflation.
The challenge of conflicting data was not limited to the US. The RBA Minutes showed that the Board had stayed on hold in Sep due to concerns that the decline in inflation had slowed, supported by signs of recovering private sector demand, stable unemployment, and “leading indicators (such as job advertisements and vacancies) that continued to point to healthy labour demand in the near term”.
However, last week’s Aus Sep labour market report showed a sharper increase in the unemployment rate to 4.5%, from 4.3% in Aug. Despite the rebound in employment growth, unemployment increased as participation also increased. This will be a concerning development for the RBA Board, and they will likely need to see whether this higher participation is absorbed/resolved next month. In the meantime, the important Q3 CPI data is due on 29 Oct, providing the RBA with a better understanding of shifts in underlying inflation. The next RBA meeting is on 3-4 Nov.
On the geopolitical front, markets continue to track the negotiations and posturing between the US and China on tariffs, leading up to the meeting between US President Trump and Chinese President Xi. The recent flare-up of tensions has been tempered with a more conciliatory tone for now.
Outlook for the week ahead: US CPI for Sep, global inflation reports for Sep (NZ, the UK, Canada, and Japan), S&P prelim PMIs for Oct
The focus this week shifts to data. Specifically, the updated inflation backdrop for Sept for the US, as well as global CPI reports. The BLS will be releasing the US CPI data at the end of the week, despite the shutdown, as it is an important input to calculate the cost-of-living adjustment for government transfer payments for 2026. The data will also be important for the FOMC meeting next week.
Also out this week will be the prelim S&P PMIs for key developed markets, offering the first view of growth and momentum leading into Q4.
Other important points for the week ahead: tensions on trade and tariff negotiations continuing to simmer between the US and China with ongoing headline risk, progress on resolving the US government shutdown, and this is the blackout period before the next FOMC meeting on the 28-29 Oct – although there are a few speeches scheduled (opening remarks).
Key factors & events to watch this week:
US inflation data – CPI for September.
The inflation data will be limited to the CPI release and is scheduled to be released at the end of the week on 24 Oct.
- Headline CPI is expected to increase by +0.4% over the month in Sep, after increasing by +0.4% in Aug. Over the year, headline CPI is expected to increase by +3.1% in Sep, up from +2.9% in Aug.
- Core CPI is expected to increase by +0.3% over the month in Sep, after increasing by +0.35% in Aug. Over the year, core CPI is expected to stay at +3.1% in Sep, versus +3.1% in Aug.
US private sector/Fed data and speeches.
- US existing home sales for Sep are expected to increase to 4.06m (annualized), up from 4.0m in Aug. Mortgage purchase applications had begun to rebound in Sep, along with falling mortgage rates.
- The Kansas City Fed Manufacturing Index for Oct will be released. The surveys released so far for Oct show mixed results for manufacturing orders and activity, while employment remains subdued but steady, and input price increases remain relatively widespread.
- Michigan Consumer Sentiment – final release for Oct. This is expected to remain around 55.
- There will be limited Fed speeches this week, given the blackout ahead of the FOMC meeting next week.
Global inflation reports for September.
- (Actual) NZ CPI for Q3 was expected to be +0.8%, but increased by +1% over the quarter, versus +0.5% in Q2. Over the year, headline CPI accelerated to +3% in Q3, up from +2.7% in Q2.
- Canada CPI for Sep is expected to fall over the month by -0.1% after a similar fall in Aug. Over the year, headline inflation is expected to remain little changed at around +1.9%. In Aug, CPI ex gasoline increased by +2.4% over the year. Median CPI for Sep is expected to slow slightly to +3% over the year in Sep, from +3.1% in Aug. The trimmed mean inflation rate is expected to remain unchanged at +3% over the year in Sep.
- UK CPI for Sep is expected to increase across both headline and core measures. Headline CPI is expected to increase to +4% over the year in Sep from +3.8% in Aug. Core CPI is also expected to increase to +3.7% in Sep from +3.6% in Aug.
- Japanese core CPI – ex fresh food (the BoJ preferred measure) is expected to increase to +2.9% over the year in Sep, from +2.7% in Aug.
China data for Sep and Q3 growth
The full range of China’s Q3 growth and Sep activity data was released earlier in the week, and ahead of the Fourth Plenum meeting this week. Details of the meeting and review of plans and initiatives will be in focus post the meeting.
S&P Prelim PMIs Oct.
S&P Prelim PMIs for Oct will be released this week, providing an update on private sector activity at the start of Q4.
This week, the US Treasury will auction and settle approx. $532bn in ST Bills, raising approx. $52bn in new money. The US Treasury will also auction to 20-year Bond and 5-year TIPS this week – both will settle on 31 Oct.
QT this week: Approx $10bn in 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
by Kim | Sep 1, 2025
The key events shaping this week: US labor market data for Aug, ISM surveys, Fed Beige Book, Euro Area CPI Aug, Aus GDP Q2, Global S&P PMIs Aug.
Recap from last week: US Inflation & Growth Amid a Shifting Balance of Risks
One of the clearest messages from Fed Chair Powell’s Jackson Hole speech was the shift in his view of the balance of risks. In the near term, he noted that risks to inflation are tilted to the upside, while risks to employment have become tilted to the downside. This led Fed Chair Powell to adopt a “proceeding carefully” approach to adjusting its policy stance and signalled a cut likely at the Sept FOMC meeting.
“Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” Fed Chair Powell, Jackson Hole speech 22 Aug 2025
Powell offered two reasons for his shift. Firstly, he noted that the slowing demand and supply of labor suggested that downside risks to employment are rising. Secondly, he acknowledged that while tariff impacts on consumer prices were “clearly visible”, what was more important for monetary policy was whether these increases raised the risks of an ongoing inflation problem. He noted Governors Waller and Bowman view that a “reasonable base case” is that inflation impacts from tariffs will be relatively short-lived.
Governor Waller’s speech last week added to this cautious, but forward-looking tone. Governor Waller continued to push for recommencing rate cuts, advocating for a move towards a more neutral stance. He did, however, temper that by remaining data dependent on how quickly to move the policy rate to a more neutral setting. While he remained data-dependent on the pace of policy adjustments, he did not believe the Fed had fallen “substantially” behind the curve. Waller indicated that he supports a cut at the upcoming Sep meeting and anticipates additional cuts over the next three to six months, also appearing to take a cautious approach.
This shift in the Fed’s perspective means that the evolution of the upcoming data, including last week’s US inflation and growth data and this week’s labor market data, will be important for how the Fed may navigate a more equal weight to the risks on both sides of its mandate.
Last week’s Fed-preferred PCE inflation data showed persistent inflation pressure, but a significant acceleration was not evident. Both headline and core PCE inflation came in as expected, with headline PCE edging slightly higher to +2.6% while core PCE increased to +2.9% over the year. Most of the inflation pressure in the month was centred back on core services, which did accelerate to +0.4% over the month and to +3.5% over the year. Core goods inflation, where we’d expect to see some tariff-led effects, remained flat over the month, but accelerated to +1.1% over the year. Other important measures of underlying inflation indicate some easing in inflation this month, but remained firmer over the year after increasing since May. It’s likely still too early to see the full, broad-based tariff impacts, as they are likely to have a rolling effect. For now, the inflation picture remains one of persistence and likely supports Chair Powell’s view for the need to “proceed cautiously”.
Last week, several indicators suggested some improvement in the growth backdrop, supporting a more positive view for the economy. Firstly, Q2 GDP was revised higher to an annualized pace of +3.3%. This was led by a small upward revision from personal spending, but mostly from fixed investment spending. This was followed by a step higher in the latest Atlanta Fed GDP nowcast for Q3 growth, which increased last week to a +3.5% run rate. The main contributors to the faster Q3 growth so far in the quarter were from net exports and non-residential investment spending. Importantly, personal spending and income growth also firmed in Jul.
With inflation remaining persistent and growth showing signs of resilience, our focus now shifts to the other side of the Fed’s mandate: assessing the overall health of the US labor market in the week ahead. The upcoming labor market data for Aug will be a crucial test of whether the recent signs of a slowdown are temporary or a new, more concerning trend.
Outlook for the week ahead: US labor market for Aug, US ISM PMIs, Fed Beige Book, Euro Area CPI Aug, Aus GDP Q2, Global S&P PMIs Aug
At Jackson Hole, Fed Chair Powell signalled a shift in which both upside inflation risks and downside employment risks have become equally prominent. The evolution of incoming data will be important for how the Fed may navigate this challenge to balance both sides of its mandate. With inflation remaining persistent, but not worsening, the US labor market update for Aug will be important, especially given the slowdown and revisions in Jul. The key question this week is whether the US labor market continues to weaken after the slowdown in job growth in Jul and the concerning downward revisions to payroll growth in May and Jun. Other US data will provide further input into the growth momentum of the economy in Aug, ahead of the next FOMC meeting on 16-17 Sep.
Outside of the US, data will continue to provide a comparative view of growth, inflation, and employment impacts with upcoming central bank meetings this month.
Key factors & events to watch this week
A broad view of the health of the US labor market.
Broadly, we’ll be looking for any changes to that “slow hiring, slow firing” dynamic that currently characterizes the labor market. While non-farm payroll growth and revisions will be important, there will also be some focus on data indicating changes in labor supply.
- US non-farm payroll growth is expected to stabilize around +74k in Aug versus +73k in Jul. Revisions to Jul and Jun will be important to understanding shifts in the overall trend of payroll growth.
- The unemployment rate is expected to edge higher to 4.3% in Aug from 4.2% in Jul. Last month, the participation rate continued to edge lower to 62.2%, which helped to offset some of the weakness in employment growth, keeping the unemployment rate low.
- Avg weekly hours are expected to remain unchanged at 34.3 in Aug.
- Avg hourly earnings are expected to increase by +0.3% over the month and remain around +3.9% over the year.
- Job Openings via the JOLTS report for Jul is expected to slow to 7.24m in Jul from 7.43m in Jun (data lag by a month).
- The Challenger job cut announcements are expected to continue to ease.
- Initial claims are expected to remain unchanged at +229k over the week ending 30 Aug. So far, continuing claims have remained elevated – reflecting an ongoing cautious hiring environment.
US manufacturing and services momentum.
Key data releases this week will feed into another update on US growth momentum so far in Q3.
- Both the S&P and ISM PMI surveys across manufacturing and services will provide a view of growth momentum midway through Q3.
- US factory orders for Jul are expected to fall by -1.3% in Jul after a -4.8% fall in Jun.
- The full international trade report for Jul will be released; the advance report showed a widening in the goods trade deficit as import growth rebounded while export growth remained subdued.
US Fed Speeches & Data
- There will be limited Fed speeches this week. It will be the last week of speeches ahead of the blackout period next week, before the FOMC meeting on 16-17 Sep.
- The latest Fed Beige Book for the six weeks since mid-Jul, will be released this week. This will provide a range of business anecdotes regarding sales growth, pricing, sentiment, and labor market views.
- Hearings for Stephen Miran, the nominee to replace FOMC member Governor Kugler, are expected this week. The confirmation is expected to be expedited to fill the position before the Sep FOMC meeting.
Global growth, inflation, and employment.
Outside of the US, labour market, growth, and inflation data will be important ahead of several central bank meetings this month.
- The prelim Euro area CPI for Aug is expected to remain unchanged at 2%, versus 2% in Jul. Core CPI is expected to edge lower to +2.2% in Aug from +2.3% in Jul. The Euro area Q2 GDP is expected to be confirmed at +0.1%. ECB President Lagarde will give a speech early in the week at the ECB’s Legal Conference. The ECB meets on 10 – 11 Sep.
- Canadian labour market data for Aug is expected to show employment growth stabilized at +9k in Aug after falling -40k in Jul. The unemployment rate is expected to increase to 7% in Aug from 6.9% in Jul. The BoC meets in two weeks, just before the FOMC.
- Aus GDP for Q2 is expected to accelerate to +0.5% over the quarter. RBA Governor Bullock will give a speech after the GDP release (Technology & the Future of Central banking at the RBA). The RBA meets at the end of the month.
The broader suite of global S&P PMIs for August will be released this week, providing further insight into tariffs’ effects on global output, trade, prices, and business sentiment.
This week, the US Treasury will auction and settle approx. $739bn in ST Bills, Notes, and Bonds, raising approx. $160bn in new money.
QT this week: Approx $6.5bn 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
by Kim | Aug 18, 2025
The key events shaping the week commencing 18 August 2025 are: the annual Jackson Hole Symposium on Central Banking, Prelim S&P PMIs August, Global Inflation: UK, Canada, Euro area, and Japan.
Recap from last week: Paving the Way to Jackson Hole
Last week, US economic data provided another important update on tariff impacts feeding into domestic inflation. The latest inflation reports intensified the debate over the trajectory of US inflation and the Fed’s response. The US CPI report was mixed, but initially offered some comfort on tariffs, despite rising core inflation. This, however, was followed by a much hotter-than-expected PPI report, which served as a reality check on the potential impact of tariffs. This highlights the Fed’s primary challenge: distinguishing between persistent, underlying inflation and the potentially temporary but still-concerning effects of tariffs. While the overall growth picture remained mixed, the full impact of tariffs on the broader economy remains a key unknown. All eyes will now be on the US Fed Chair this week at the Jackson Hole symposium for signals on how the Fed will navigate these unknowns.
To better understand these dynamics, the week’s US data provided three key perspectives on domestic inflation, starting with the consumer perspective. Headline CPI came in as expected – with food inflation easing slightly over the year, and energy prices falling – while underlying core inflation accelerated. Core inflation has two factors to disentangle: the impact of tariffs on core goods inflation and a further acceleration in core services inflation. On the core goods front, the tariff effect did not appear to worsen, with core goods prices rising again by +0.2% over the month and increasing to +1.1% over the year. While this seems low, context is important: core goods are no longer providing a deflationary offset like they did before the pandemic. This may complicate the Fed’s task of getting inflation back to the 2% target. Core services inflation remained firm at +3.65% and has stalled at this pace for the last five months, despite continued moderation in shelter prices.
Last month, we were concerned that consumer inflation pressure had broadened out among categories. From a shorter-term perspective, the monthly trimmed mean and median inflation rates eased in Jul, despite the firmer core CPI, suggesting somewhat less broad-based inflation pressure compared to Jun. However, the trend in the annual rates of trimmed mean and median inflation accelerated to new YTD highs this month. This could be an important indicator that inflationary pressures have become broader and remained more persistent than at the start of the year. This was also potentially reflected in some of the firming of consumer inflation expectations data from the prelim Michigan survey for Aug. In other words, consumer-facing inflation pressures are likely still persistent.
The second perspective was the PPI. This measures the average change in the selling prices received by domestic producers for their output. This month, the PPI came in much higher than expected, with both headline and core PPI increasing by +0.9% over the month and accelerating to +3.3% and +3.7% respectively. The release of the report provided a reality check on the potential for tariff impacts. All key areas of PPI final demand prices accelerated this month: goods, food, energy, and services prices. This has been the first month since the introduction of tariffs where the increase in the PPI has accelerated in a meaningful way, and potentially marks a shift where tariff and inflation impacts may be feeding into the system.
The final view is the import price index, which we are using as a proxy to understand whether importers, exporters, or both are bearing the cost of tariffs. The import price index measures the price of imported goods before any duties are applied. The index is used to deflate international trade statistics in the National Accounts data. If import prices are falling, then it’s likely that exporters are lowering prices to help offset the effect of tariffs on their products. If import prices are rising or little changed, then it’s likely that domestic importers are bearing the tariff duty. On aggregate, exporters to the US did not lower prices in Jul. The important index to focus on is the import prices excluding fuels. In Jul, import prices excluding fuels increased by +0.3%, after falling by -0.3% in Jun (revised lower). Over the year, import prices ex fuels were +0.9% in Jul, up slightly from +0.8% in Jun. The 3-month annualized pace is 0%. This suggests, on aggregate, that the burden of tariffs is falling on domestic importers.
Beyond the inflation data, this week’s releases provided a crucial read on the state of domestic demand and the labor market, the other side of the Fed’s balancing act. For the Fed, spending data last week showed a resilient consumer holding things together. Retail sales growth in Jul was relatively good, coming in at +0.5% as expected, with a positive upside revision for Jun to 0.9%. The Atlanta Fed GDPNowcast for the US Q3 GDP growth run rate was steady at +2.5%. The positive contribution from the spending report helped to offset some of the weakness in industrial output in Jul. Initial jobless claims have shown little change in the broad trend of low initial claims, with continuing claims remaining stubbornly elevated.
The broader global growth backdrop stepped down last week. Euro area and UK GDP growth slowed in Q2 as expected – likely reflecting a slowdown after tariff front-running activity in Q1. Japan’s GDP firmed at +0.3% after 0% in Q1. Key data out of China also reflected slower investment growth, slower retail sales growth, and slower industrial output growth for Jul. Even the latest RBA decision cautioned that trade policy developments were “expected to have an adverse effect on global activity”. With new reciprocal tariffs and trade agreements now in place for many, but not all, key trading partners, the crucial question for markets is how economies will adapt to the new tariff regime.
The overall inflation picture still poses a challenge for the Fed, with inflation remaining persistent and additional tariff effects likely, due to their lagged introduction and business uncertainty over final rates. Last week, a rising chorus of calls for a 50bps rate cut by the Fed in Sep was quickly swept aside after the hotter PPI data. The market is still holding onto more aggressive pricing for a rate cut, but the probability has been pared back markedly (Source: CME FedWatch). This diverges from the Fed’s cautious stance, though even within the Fed, there is dissent – mostly over the timing of the path forward. Our focus now shifts to the important Jackson Hole symposium this week.
Outlook for the week ahead: Jackson Hole, Prelim S&P PMIs August, Global Inflation: UK, Canada, Euro area, & Japan.
This week, the focus will shift from data to commentary. The market will be looking to Fed Chair Powell for clarity and guidance on the path of monetary policy. His speech at the annual Jackson Hole Symposium will provide an important lens for how the Fed is thinking about the inflation-labor market dual mandate amid the still notable unknowns on tariffs and complicated by dissent within the Committee and a hostile political backdrop.
Key factors & events to watch this week:
Jackson Hole Symposium, the US Federal Reserve, and the Monetary Policy Outlook.
- The Jackson Hole Symposium is the key event this week from 21-23 August, with the theme “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy”.
- US Fed Chair Powell’s speech is the key highlight, and this is scheduled for Friday, 22 August – the topic of his speech is the Economic Outlook and Policy Framework Review. While he is unlikely to give explicit forward guidance, it will be an opportunity to explain how he is weighing the recent data (persistent inflation versus weaker payrolls), the uncertainty over tariffs, and signalling on the path of policy settings.
- Other central bank speeches may also provide some context for expectations of a global slowdown amid rising tariffs.
- The FOMC Minutes of the last meeting will be released. Of interest in the last meeting was the dissent among committee members regarding the policy decision.
- Other speeches; notably, Vice Chair (Supervision) Bowman and Governor Waller will be speaking earlier in the week at the Blockchain Symposium.
US Domestic Demand and Activity.
Key housing data for Jul will be released this week and will provide an important input into the view of Q3 growth momentum.
- Building permits for Jul are expected to be little changed at 1.39m annualized, from 1.39m in Jun.
- Housing starts (will feed into the GDP nowcast run rate) are expected to moderate further in Jul to 1.3m annualized, from 1.32m in Jun.
- Existing home sales for Jul are expected to be little changed at 3.92m annualized, down slightly from 3.39m in Jun.
- Of note has been the recent rebound in mortgage applications – last week increasing by +10.9% as mortgage rates have begun to moderate. Most of this increase was led by refinance applications.
- US initial claims are expected to remain low at 227k for the wk ending 16 Aug, up slightly from 224k in the prior week. We will continue to watch the level of continuing claims, which remain elevated at 1.953m people.
Global Central Banks and Inflation.
- The RBNZ will meet this week and is expected to cut rates by a further 25bps.
- Global CPI reports will be in focus for several important central banks.
- Canada’s headline CPI for Jul is expected to be little changed at +1.9% over the year, with the monthly rate expected to increase by +0.4% in Jul from +0.2% in Jun. Measures of core inflation are expected to stay firm with the trimmed mean at +3% and the median at +3.1%.
- UK CPI for Jul is expected to edge higher to +3.7% in Jul, after rising to +3.6% in Jun. Rising domestic inflation has been led by key government policy changes.
- The Euro area final CPI for Jul is expected to confirm the prelim headline inflation rate at +2%, with core inflation remaining at +2.3%. Services inflation is expected to slow to +3.1% in Jul.
- Japan National CPI for July is expected to show that the main BoJ measure of underlying inflation, core CPI ex fresh food, moderated from +3.3% in Jun to +3% in Jul.
S&P Flash PMIs for August
S&P Flash PMIs for August will be released later in the week, providing further insight into tariffs’ effects on global output, trade, prices, and business sentiment.
This week, the US Treasury will auction and settle approx. $490bn in ST Bills, raising approx. $89bn in new money. The US Treasury will also auction the 20-year Bond and 30-year TIPS this week, and both to settle at the end of the month.
QT this week: Approx $12bn 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
by Kim | Jun 23, 2025
Key events this week; US PCE Inflation, Fed Chair Powell testimony, US goods trade balance (prelim), and S&P prelim PMIs Jun
Recap from last week: Central Banks Navigate Trade Uncertainty
Amidst persistent tariff and trade uncertainties, major central banks—including the Fed, BoJ, and the BoE—maintained their cautious “wait and see” approaches last week. The global economic outlook continues to be overshadowed by trade tensions and now, elevated, and potentially, escalating geopolitical risks following the US strikes on Iranian nuclear facilities over the weekend.
Last week, the FOMC kept rates on hold, noting that, with the US economy remaining ‘solid’, policy remained well positioned to respond in a timely way to economic developments. The decision reflected some easing in tariff-related uncertainty compared to the prior two meetings, with Powell noting that tariff uncertainty peaked in April. There is still a high degree of uncertainty over the “final” version of tariffs and how they might flow through the supply chain into prices and activity; however, Powell noted that “we’re going to learn a great deal more over the summer on tariffs”. The latest projections showed members revised core PCE inflation higher and growth slower through the end of 2025. The path of rate cuts has become split between members projecting no rate cuts through the end of the year, and members projecting at least two rate cuts through the end of the year. In his press conference, Chair Powell highlighted that one of the Fed’s jobs was to “make sure that a one-time increase in inflation doesn’t turn into an inflation problem”. In contrast, Fed Gov. Waller reiterated his case to “look through” tariff-led inflation, expecting it to be a mostly one-off effect (source: CNBC interview 20 June). Gov. Waller advocated to restart rate cuts as early as the July meeting given the recent run of more favorable inflation reports allowing for his “good news” rate cuts – but he also highlighted that these cuts would likely need to take a slow, steady path.
The Fed’s decision continues to highlight the importance of tracking inflation impacts, the labor market, and activity. The trajectory of growth through this initial tariff & trade shock has been mostly resilient – with distortions creating uncertainty over the near-term path of growth. Other policy items, including immigration, fiscal, and geopolitical events, are now coming into the frame, adding a further layer of uncertainty over the growth and inflation outlook.
US data last week was mostly weaker than expected and growth expectations for Q2 edged lower. The latest Atlanta Fed GDP nowcast showed growth slowing from +3.7% at the start of the week to +3.4% by the end of the week. The main contributor to the slowdown was the larger-than-expected fall in nominal retail sales in May, driven by the notable fall in motor vehicle sales, as well as the fall in gasoline prices affecting nominal sales growth. The fall in housing starts also contributed to the slower growth run rate for Q2 – as residential investment spending continues to contract slightly through Q2. Manufacturing output was little changed after falling in Apr. Excluding the +5% increase in motor vehicle output, manufacturing output fell by -0.3% in the month. The latest initial claims fell slightly to 245k while the focus remains on continuing claims near this cycle high of 1.945m.
The BoJ kept its policy settings on hold, continuing to cite uncertainty over the outcomes of trade negotiations on output and prices. For now, there has been no trade deal negotiated between the US and Japan. The BoJ did announce it was slowing the pace of cuts to its Bond buying program, starting next April, as it maintained its overall policy normalization bias.
“We made our decision to ensure we’re not cutting purchases too fast in a way that would cause a negative impact on the economy through abnormal volatility in yields,” Ueda said at a press briefing after the decision. (Source: Bloomberg)
The latest Japanese inflation data will likely keep the BoJ on edge as food prices (ex-fresh food) continue to rise. The BoJ preferred measure of core CPI ex fresh food increased to +3.7% in May, as the monthly rate eased to +0.4%, but remained elevated. CPI excluding fresh food and energy increased to +3.3% over the year in May, as the monthly pace slowed to +0.3%. The BoJ will continue to monitor impacts from tariffs, as well as impacts on energy prices from geopolitical events.
The BoE kept its policy rate unchanged this month in a 6-3 majority vote. According to the decision, disinflationary progress had continued, but there was not a strong case for a further easing of monetary policy at this meeting. Inflation is expected to stay at around the +3.5% rate for the remainder of the year. Inflation had increased to +3.4% in May from +2.6% in Mar, in line with expectations and due mostly to the rise in regulated prices and energy prices in Apr. At the same time, UK GDP growth may have weakened at the start of Q2, and the labour market has continued to loosen. The latest retail sales (volume) result for May showed a notable fall of -2.7% over the month adding further to concerns of a growth slowdown. Guidance from the BoE continued to cite “heightened unpredictability in the economic environment”.
In contrast, the Swiss National Bank reduced its policy rate back down to zero; after previously signaling it was likely finished with easing. Market turmoil resulting from recent US policy shifts was seen as a catalyst for a strengthening Franc and falling prices;
Speaking to reporters in Zurich on Thursday, President Martin Schlegel said the SNB is attempting to counter “lower inflationary pressure” and stressed that the central bank “will continue to monitor the situation closely and adjust our monetary policy if necessary.” (Source: Bloomberg)
Outlook for the week ahead; US PCE Inflation, Fed Chair Powell testimony, US goods trade balance (prelim), and S&P prelim PMIs Jun
As we look to the week ahead, expect a broad range of economic events, data, and persistent risks. Geopolitical concerns will likely remain elevated with the degree of escalation in the conflict unclear. The data calendar highlights include US inflation and growth, alongside early insights into broader activity momentum from the S&P prelim PMIs for Jun. Furthermore, central bank commentary and the looming July 9 reciprocal tariff deadline will also remain firmly on the radar.
Key factors & events to watch this week;
The Fed-preferred PCE inflation data for May will be released this week.
- Headline PCE inflation is expected to increase by +0.1% over the month, unchanged from +0.1% in Apr. Annual headline PCE inflation is expected to increase by +2.3% in May, up from 2.15% in Apr.
- Core PCE inflation is expected to increase by +0.1% in May, in line with +0.1% in Apr. The annual core PCE inflation rate is expected to increase from +2.5% in Apr to +2.6% in May.
US consumption and activity data will feature heavily this week. This includes the advance economic indicators showing how the trade balance in goods is evolving amid the tariff agenda and how it’s likely to affect growth in Q2.
- US Personal spending growth is expected to be unchanged in May at +0.2% from +0.2% in Apr.
- US Personal income growth is also expected to slow in May to +0.2% from +0.8% in Apr.
- The latest prelim goods trade balance for May is expected to widen slightly to -$91.9bn. The Apr goods trade balance narrowed notably to -$87bn after sharp falls in imports. This resulted in a positive impact on Q2 growth – so the degree to which this trend continues will be important for Q2 growth.
- US Q1 GDP is expected to be confirmed at -0.2% (annualized).
- US durable goods orders are expected to increase by +0.1% in May after a -6% fall in Apr.
- US new home sales are expected to ease further to 0.692m (annualized) in May from 0.743m in Apr. Existing home sales are expected to remain weaker at 3.96m annualized in May, down from 4.0m in Apr.
- Both the Conference Board and Michigan consumer sentiment surveys for Jun will be released this week – both providing a view of changes in consumer expectations in the outlook.
- US initial claims are expected to be unchanged at 247k in the week ending 21 Jun 2025.
Central bank speeches and testimony will feature this week.
- US Fed Chair Powell will give two days of testimony this week – Semi-annual Monetary Policy Report to Congress. The main topics are likely to be questioning over the timing of rate cuts and inflation progress.
- Other Fed speeches this week include Fed Gov. Waller giving opening remarks at the International Journal of Central Banking Conference. The full calendar of speaking events can be found here.
- BoE Governor Bailey will also provide testimony this week to the Lords Economic Affairs Committee.
- The EU leaders summit will take place this week on 26-27 Jun.
Canada CPI for May will be released this week. Firming inflation had been noted by the BoC as it held its policy settings unchanged at its last meeting. The fall in inflation in Apr was the result of a fall in energy prices from the removal of the consumer carbon price.
- Headline CPI is expected to rebound to +0.5% over the month, from -0.1% in Apr. Headline CPI is expected to increase from +1.7% in Apr.
- The BoC core measures of inflation are expected to stay elevated at +3.1% for the trimmed mean and +3.2% for the median rate.
S&P Prelim PMI’s for Jun will be released at the start of the week. This will provide some insight into growth momentum in the final month of Q2 amid the onset of the new trade and tariff regime.
This week, the US Treasury will auction and/or settle approx. $407bn in ST Bills and 2-year FRNs with a paydown of approx. $31bn. The US Treasury will also auction the 2-year, 5-year, and 7-year Notes this week – and will settle on 30 Jun, together with the 20-year Bond and 5-year TIPs.
QT this week: Approx $9.1bn 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
