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 25, 2026.
Key Focus This Week:
The key events for the w/c 23 March 2026: Prelim S&P PMIs March, global CPI reports: Japan, Aus, and the UK
The conflict in the Middle East has now entered its fourth week, with the Strait of Hormuz remaining closed. Markets are closely watching developments around the US ultimatum to reopen the Strait, with headline risk elevated in both directions.
Against this backdrop, last week’s central bank meetings provided important insight into how policymakers are assessing the risks of this evolving shock. While policy decisions diverged, a common theme emerged: central banks have shifted into a more conditional stance, balancing rising inflation risks from energy prices against uncertainty around the duration and impact of the conflict.
But as policymakers moved to manage expectations, global bond markets responded with a notable sell-off, pushing yields higher as investors began to price in the inflationary implications of a prolonged energy shock.
This was the second consecutive hike by the RBA, which signalled a pull-forward of its expected May hike. The primary driver of the decision was the further upside risk to inflation due to the energy price shock, occurring against a backdrop where inflation was already “too high”. The 5-4 decision in favour of a hike (versus hold) reflected a Board split on when to hike, not whether to hike.
“The Board concluded that the cash rate was not at a level consistent with returning inflation to target within a reasonable time frame.” RBA Governor Bullock
The decision to stay on hold was unanimous. Before the onset of hostilities, markets had priced the possibility of a cut at this meeting. The decision to hold reflected a sharp pivot from the “continued disinflation” narrative to the expected inflation risk “caused” by this conflict. As a result, guidance shifted from “expecting more cuts” to “stand ready to act”. The key friction, however, stems from a growth and labour market backdrop that is far more subdued than during the energy price shock in 2022, a point noted by Governor Bailey.
“The recent experience of high inflation may also make households and businesses more sensitive to a new inflationary shock. At the same time, the starting point for this shock is a real economy with limited pricing power. Holding Bank Rate at this meeting is appropriate.” BoE Governor Bailey
The BoJ retained its guidance for hikes and policy normalisation. The decision to hold maintained the balance between achieving its inflation target through the “virtuous cycle” of wages and prices while the economy continues to recover. Governor Ueda expects that downward growth impacts from the conflict would likely be temporary; if so, rate hikes remain on the table. He also noted concern among Board members that inflation risks were skewed to the upside by energy prices. Furthermore, Takata’s dissent explicitly highlighted a key friction: upside risks to inflation against an inflation backdrop already largely at target with inflation expectations rising ‘moderately’.
“Even if economic growth were to decline, if that development is temporary and there’s not so much impact on the trajectory of the price trend then of course it will be possible to raise interest rates,” BoJ Governor Ueda
A more neutral decision by the FOMC, albeit with hawkish undertones. The hold was based on the ongoing tension in the Fed’s dual mandate goals, where upside risks to inflation exist against the backdrop of downside risks to the labor market. While Chair Powell noted several times that it was “too soon” to establish the scope and duration of the conflict’s impact, committee members upgraded their growth and inflation outlooks. During the press conference, Chair Powell highlighted a lack of progress on core goods inflation. The FOMC maintained its easing bias, but trimmed expectations to a median of one cut this year.
“Not as much as we had hoped, but some progress on inflation. It should come as we start to see in the middle of the year, progress on tariffs going through once and then tariff inflation coming down. That’s — we should be seeing that. And the rate forecast is conditional on the performance of the economy. So if we don’t see that progress, then you won’t see a rate cut.” Fed Chair Powell
The decision to stay on hold maintained its “Three Times Two” (2% Target, 2% Expectations, 2% Rates) baseline. However, risks have diverged, with forecast revisions for higher inflation and lower growth due to energy prices. Europe is at the forefront of this unfolding energy price shock, and uncertainty remains elevated. The ECB outlined two key scenarios for action and signalled greater agility and preparedness in the face of this latest shock.
“I think we are both well positioned and well equipped to deal with the development of a major shock that is unfolding, and we will continue doing that.” ECB President Lagarde
The decision to stay on hold primarily cited recent weaker activity and downside growth risks, while remaining alert to the inflationary risks from rising energy prices. The BoC has been lowering rates (now at the lower floor of ‘neutral’) to support the economy through structural trade and tariff adjustments; inflation slowed to +1.8% in Feb. While the Bank would look through the immediate impact on inflation, it remains committed to preventing those effects from broadening and becoming persistent. The BoC appears alert to a policy error – hiking into weakening economy in early 2026 – and shifted guidance, removing “the policy rate remains appropriate”.
“With inflation close to target and the economy in excess supply, the risk that higher energy prices quickly spread to the prices of other goods and serviceslooks contained.” BoC Governor Macklem
The week ahead is relatively light on data, but the macro backdrop remains dominated by geopolitical developments and their implications for energy prices and inflation.
Geopolitical risks will remain elevated, as the start of the week remains within the US 48-hour ultimatum window for Iran to reopen the Strait of Hormuz. Headline risks remain elevated in both directions.
Of most interest on the data front this week will be the S&P preliminary PMIs for key developed markets at the start of March. These releases may provide some of the first indications of how the conflict is beginning to impact business activity, pricing, and sentiment.
There will also be several important CPI reports for Japan, Aus, and the UK for Feb.
S&P Prelim PMI’s for March
FOMC speeches
There will be several Fed speeches this week. Of note will be Vice Chair Jefferson speaking on the Economic Outlook and Energy Effects on 26 Mar. Governor Barr will also speak on the Economy on the same day. Other scheduled speeches will be noted in the calendar.
Global CPI reports – Feb
This week, the US Treasury will auction and settle approx $518bn in ST Bills & FRNs, raising approx. $1bn in new money. Approx $14bn in ST Bills will mature on the Fed balance sheet and will be reinvested. The US Treasury will also auction the 2-year, 5-year, and 7-year Notes this week – to settle on 31 Mar/next 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 for the w/c 16 March 2026: Central Bank meetings: RBA, BoC, FOMC, BoJ, SNB, BoE, and ECB; US PPI; Aus Labour market; Canada CPI
The conflict in the Middle East and the resulting closure of the Strait of Hormuz remain the primary drivers of sentiment. The drift back up in oil prices through the end of last week suggests “conflict duration risk” remains a primary concern. If the conflict becomes more entrenched (and the Strait remains closed), the structural threat to global energy distribution and production may become harder for markets to “look through.” The current uncertainty over the duration of this conflict presents a difficult trade-off for key central bank meetings this week: the longer the conflict lasts, the greater the risk that elevated energy prices un-anchor inflation expectations, squeeze real incomes, and weigh on global growth.
Last week, the US GDP revision for Q4 suggested that growth in 2025 ended on a softer-than-expected note. However, growth was expected to slow in Q4 (despite the much higher tracking of growth ahead of official results), due to the effects of the US government shutdown. The “second estimate” of US GDP growth in Q4 was revised notably lower from 1.4% to 0.7% annualized. While most areas of expenditure contributed to the growth downgrade in Q4, the largest contributions were from personal spending and net exports. Overall in Q4, the largest contributors to the slowdown in growth in Q4 versus Q3 were from slower personal consumption expenditure growth, a contraction in net exports, and the decline in government expenditure.
Looking ahead, the Atlanta Fed’s GDP Nowcast for Q1 2026 growth remains at a resilient +2.7%. However, momentum cooled following last week’s data releases. While a negative Feb labor report weighed on personal spending estimates, this was partially offset by constructive data in housing starts and existing home sales. Personal income growth strengthened in Jan, but growth in real spending remained low. This suggests that softer personal consumption growth has so far persisted into the current quarter, just as higher energy prices threaten a further squeeze on real incomes.
Importantly for the outlook, the Fed’s preferred PCE inflation data provided a mixed baseline. Headline inflation edged lower to +2.8% over the year, but core PCE ticked up to 3.1% in Jan. Both headline and core PCE inflation are higher than a year ago – reflecting a stickier inflation profile leading into a period of potentially higher energy prices. While the firming trend in core goods and core services inflation remains a concern, the median and the trimmed mean, to a lesser extent, suggest that underlying price pressures likely did not broaden out this month. The more current CPI report for Feb came in as expected, remaining lower at +2.4% for headline and +2.5% for core, and the upcoming PPI for Feb this week will help gauge the read-through to the Feb PCE result.
The week ahead is defined by an unusual calendar alignment among central bank meetings, with at least seven key institutions scheduled to meet. These banks are facing elevated uncertainty over the duration of the current conflict and its subsequent impact on energy prices and inflation. Consequently, policymakers will need to reconcile these global pressures with their respective domestic policy nuances as they navigate yet another shock in this cycle of elevated uncertainty.
There will also be several key data releases, and markets are likely to remain firmly focused on the conflict and energy markets. Headline risks remain elevated in both directions.
Central Bank Meetings
Most central banks are expected to stay on hold in a “wait-and-see” approach for now, due to uncertainty over the duration and scope of the conflict and its resulting impact on energy prices and inflation. Many markets were expecting policy easing through the remainder of the year; however, policymakers will be cognizant of the shift in market pricing for the path of ST rates – in some cases, shifting toward the prospect of hikes this year, as the risk of a prolonged conflict could see higher energy prices derail inflation progress. For most central banks, it will be too early to tell. However, signalling their commitment to inflation mandates may be an important part of central bank decisions this week to keep inflation expectations anchored amid the uncertainty. We will continue to track the signalling by central banks on the outlook and for shifts in guidance.
RBA
BoC
FOMC
BoJ
BoE
ECB
Geopolitical Risks
Geopolitical risks are expected to remain elevated as markets grapple with the uncertain trajectory and scope of the conflict.
Global Data
This week, the US Treasury will auction and settle approx $679bn in ST Bills, Notes, and Bonds, raising approx. $96bn in new money. Approx $26bn in ST Bills will mature on the Fed balance sheet and will be reinvested. The US Treasury will also auction the 10-year TIPS and 20-year Bond this week – both to settle at the end of the month.
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 for the w/c 9 February 2026: US Labor Market, Retail Sales, and CPI
Due to the lapse in US government funding early last week, the release of the US non-farm payrolls and broader employment report for Jan were postponed to this week. In the absence of this more consequential data, attention shifted to softening second-tier US labor metrics and the gap between resilient business surveys and a cooling labor market.
The week was also characterized by the trio of key central bank decisions, which highlighted a growing divergence in policy outlooks.
While awaiting the full January report, a range of softer metrics reinforced the “low-dynamism” setting of the US labor market.
The Jan PMI surveys highlighted the ongoing disconnect between the robust expansion in output and the tepid employment response.
Inflation served as the primary axis of divergence among central bank decisions this week.
RBA – Tapping the Brakes (Hike to 3.85%)
The RBA delivered a unanimous 25bps hike in response to concerns of higher and persistent inflation. The Board flagged “excess demand” and signalled that financial conditions may not be as restrictive as previously thought. The projected return to its inflation target has been pushed out to 2028. Forward guidance was again suspended due to high uncertainty over the persistence of inflation. The RBA is remaining in a data-dependent stance, ruling “nothing in or out” regarding future moves.
BoE – A Dovish Hold (3.75%)
The razor-thin 5-4 decision to hold reflects a delicate balancing act. The Committee is weighing the risk of easing too much before inflation is sustainably back to target against the risk of easing too little, now that economic slack is judged to be widening amid a subdued outlook for demand. Despite the decision to stay on hold, the Committee is expecting a faster return to the inflation target from April. Guidance was clear: based on current evidence, the Bank Rate is likely to be reduced further. Judgements around further easing will become (or, remain) a closer call.
ECB – Watchful Hold (2%)
The ECB maintained current policy settings, signalling they are in a “good place” with inflation remaining consistent with the 2% medium-term inflation target. With no reduction in its assessment of broader risks, specifically regarding tariffs and geopolitical shifts, ECB guidance remained suspended. In the absence of new forecasts, the ECB is focused on the evolution of services inflation and wage growth to confirm that the disinflationary trend is enduring.
This is a significant week for U.S. macro data, covering the “big three”: non-farm payrolls & the employment situation, household spending, and inflation. While the FOMC remains on hold for now, these upcoming data points will provide a critical update to the Fed’s ‘balance of risks’ regarding its dual mandate, and could shift market expectations for the timing of the next rate cut.
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 clear deviation from the ‘stabilizing’ trend would likely force a re-evaluation of the current ‘on hold’ stance well before the market’s expected Jun cut window.
US Retail Sales – Dec
US Inflation – CPI Jan
US Fed Speeches
This week, the US Treasury will auction and settle approx. $525bn in ST Bills, raising approx. $62bn in new money. The US Treasury will also auction the 3-year Note, the 10-year Note, and the 30-year Bond this week, to settle next week. Approx $16bn 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
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
