Welcome to Michael Kramer’s pick of the top three market events to look out for in the week ahead.
It will be a holiday-shortened trading week in the US, with markets closed on 19 June for Juneteenth National Independence Day. As a result, market-moving news flow may be relatively light. Most of the action will be from the UK, with the CPI inflation report midweek, followed by the Bank of England policy rate decision on Thursday.
US May retail sales
Tuesday 18 June
Given a few weak economic data points in the last couple of weeks, investors will pay close attention to this US retail sales release to see if the US consumer is finally showing signs that higher prices are slowing spending. Overall, May retail sales are expected to show a gain of 0.2% month-on-month versus a flat reading in April. Meanwhile, the retail sales control group is expected to show a gain of 0.3% versus a decline of 0.3% in April.
Weaker numbers could mean long-term Treasury rates continue declining following May's weaker-than-expected CPI and PPI readings. This could be bullish for ETFs such as the iShares 20+ Year Treasury Bond ETF (TLT). The ETF has recently risen above a long-term downtrend and could be heading to a short-term level of resistance and a gap created at the end of March around $94.50. A push beyond the $94.50 could set up a further climb to around $96.30.
UK May CPI
Wednesday 19 June
The UK consumer price index is important, coming one day before the Bank of England's policy decision The month-on-month inflation rate slowed to 0.3% in April, after two back-to-back prints of 0.6% in February and March. Meanwhile, core CPI will be closely watched after slowing to 3.9% in April.
The GBP/USD pair has struggled to break out above $1.28 since August 2023. Every time it has reached that level, the pound has backed off and traded lower. This means the market will need a reason to push the pound even higher. A move above $1.28 could send the pound back to $1.29 or $1.30, while a failure keeps it stuck at lower levels for some time longer – unless the Bank of England provides a spark on Thursday.
Bank of England interest rate decision
Thursday 20 June
The market isn’t expecting the central bank to make any moves at this week’s policy meeting. For now, the market is pricing in a nearly 90% chance of the first rate cut in September, with a full cut by November, and three rate cuts in total by May 2025. This means the market will be listening closely for any signs that the central bank is thinking differently. Wednesday’s CPI report may also play into that commentary.
Markets have undoubtedly been in a risk-on tear for months, but there have recently been signs of cooling in the FTSE 100. The index is about 3.6% off its recent highs and has been losing a lot of momentum. For the FTSE to continue to rise, it will need that risk-on mentality to stay in place, and anything that deviates from this at the central bank meeting could contribute to further downside movements. In such a case, the index could fall to 8,075 – the uptrend that started in February. Breaking that trend could lead to a further drop to the next support level, at around 8,000.
Key economic and company events
Here’s our rundown of notable economic announcements and company reports scheduled for the coming week:
Monday
- China: May retail sales and industrial production
- Italy: May consumer price index (CPI)
- Results: LA-Z-Boy (Q4), MindGym (FY)
Tuesday
- Australia: Reserve bank of Australia interest rate decision
- Eurozone: May harmonised CPI
- Japan: May imports, exports and trade balance; Bank of Japan meeting minutes
- US: May retail sales and industrial production
- Results: Ashtead (FY), KB Home (Q2), Lennar Corporation (Q2), Oxford Biodynamics (HY)
Wednesday
- New Zealand: Q1 gross domestic product
- UK: May CPI
- Results: Berkeley Group (FY), Young’s (FY)
Thursday
- China: People’s Bank of China interest rate decision
- Eurozone: June consumer confidence
- Germany: May producer price index
- Japan: May CPI
- Switzerland: Swiss National Bank interest rate decision
- UK: Bank of England interest rate decision
- US: May building permits and housing starts; weekly initial jobless claims
- Results: Accenture (Q3), CMC Markets (FY), Commercial Metals Company (Q3), Darden Restaurants (Q4), Jabil (Q3), Kroger (Q1), Smith DS (FY)
Friday
- Canada: April retail sales
- Eurozone: June preliminary manufacturing and services purchasing managers’ indices (PMI)
- France: June preliminary manufacturing and services PMI
- Germany: June preliminary manufacturing and services PMI
- UK: May retail sales; June preliminary manufacturing and services PMI
- US: June preliminary manufacturing and services PMI
- Results: CarMax (Q1), Factset Research Systems (Q3)
Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change.
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