Key events to watch in the week ahead: 10 – 16 June 2024

This week’s overview

Wall Street regained its footing after a slight dip the week before, as recent series of events has left eyes on whether the Federal Reserve (Fed) will follow the lead from the Bank of Canada and European Central Bank (ECB) for any earlier rate cut. This is supported by the downside surprises in US job indicators this week as well, although much weight will still revolve around the US non-farm payroll data out later today.

Into the new week, here are four things on the radar.

12 June 2024 (Wednesday, 9.30am SGT): China’s consumer price index (CPI) and producer price index (PPI)

In April, China’s consumer inflation rate maintained in positive territory at 0.3% year-on-year (YoY), delivering an uptick from the 0.1% prior. April producer prices have also improved to a smaller year-on-year contraction at -2.5% versus the -2.8% in March.

The third straight month of positive consumer price growth may reflect some stabilisation in domestic demand, although recovery is still somewhat gradual with a subdued CPI read. Price increases in areas such as energy , education and tourism have aided to offset declining food prices.

Given the mixed set of Purchasing Managers' Index (PMI) figures and trade data this week, market participants will be seeking more clues on the country’s economic recovery to gauge the success of current policy support measures.

Expectations are for upcoming inflation read to remain stable, with consumer prices remaining unchanged at 0.3% year-on-year while producer prices are expected to improve further to -1.8% from the previous -2.5%.

12 June 2024 (Wednesday, 8.30pm SGT): US CPI

Last month (April), inflation readings snapped a three-month run of stronger-than-expected readings. Headline inflation eased to 3.4% YoY from 3.5% prior, while core inflation eased to 3.6% YoY from 3.8%, its lowest reading since April 2021.

This month (May), the preliminary expectation is for headline inflation to stay at 3.4% YoY. Core inflation is also expected to remain stable at 3.6% YoY. An inline or cooler set of numbers would likely reinforce expectations of a 25 basis point (bp) Fed rate in September this year, currently about 80% priced.

13 June 2024 (Thursday, 2am SGT): Fed interest rate decision

At its last meeting in May, the Federal Open Market Committee (FOMC) kept the Fed Funds rate unchanged at 5.25% - 5.50% for a sixth straight meeting. Fed Chair Powell said it would take longer than expected for inflation to return to the Fed 2% target, ruling out a rate cut in the near term and also a rate hike.

The June FOMC meeting is expected to see the Fed keep rates on hold, and its dots will likely be updated to show two rate cuts are expected this year rather than three, reflecting inflations' slower pace towards target.

The Fed Chair is expected to emphasise the need for patience and for incoming inflation data to cool further before the Fed acts on its rate-cutting bias.

14 June 2024 (Friday, 11am SGT): Bank of Japan (BoJ) interest rate decision

Above-target inflation and improving wage growth over the past month may support the view for further policy normalisation, with some hopes that a virtuous wage-price spiral could be in place to bring its ‘sustainable and stable 2% inflation’ target in sight.

That said, there will still likely be some caution around the pace at which the ultra-accommodative policies unwind. This is given that easing inflation has yet to find a floor, while growth in consumer spending remains tepid despite some signs of recovery.

This week, BoJ Governor, Kazuo Ueda, floated the idea of reducing the central bank's bond buying, with market watchers taking it as a signal that it may occur as early as next week’s meeting. Focus will be on the pace of slowing from the current ¥6 trillion bond-buying per month, with market views leaning towards ¥5 trillion as the new figure.

The timeline for the next BoJ’s policy hike will also be sought from the policy statement and press conference. Current market rate expectations are for the BoJ to raise rates further potentially in July, which will leave eyes on any shift in tone from the BoJ’s previous dovish stance.