Key events to watch in the week ahead: 24 – 30 June 2024

This week’s overview

A series of softer-than-expected US data over the past week continues to reflect a slowing economic backdrop amid elevated interest rates. That said, market participants found comfort that inflation has been reflecting further progress, which seems to offer room for the Federal Reserve (Fed) to ease policies sooner rather than later.

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

26 June 2024 (Wednesday, 9.30am SGT): Australia’s monthly consumer price index (CPI) indicator

At the latest Reserve Bank of Australia (RBA) meeting, the central bank kept its official cash rate on hold at 4.35% for the fifth straight meeting. While policymakers acknowledged that inflation has been easing, it has been doing so more slowly than previously expected and pricing pressures remain well above the midpoint of its 2-3% target range.

Broad market expectations are looking for the RBA to kickstart its policy easing cycle only in April next year. The central bank has also stuck to a broadly neutral stance, so as to retain some policy flexibility and to monitor incoming data for conviction that inflation is on track to return to target. A lower-than-expected inflation read may potentially help to push the rate-easing timeline forward.

Ahead, expectations are for monthly CPI to come in at 3.8%, an uptick from the 3.6% prior, which will mark the third straight month of increase.

28 June 2024 (Friday, 8.30pm SGT): US core Personal Consumption Expenditures (PCE) price index

Following the downside surprises in US consumer and producer prices for May, market participants will be scrutinising the US PCE price data for signs of further inflation progress, so as to offer more flexibility for the Fed around upcoming rate cuts.

Being the Fed’s preferred inflation gauge, both the headline and core PCE data has eased significantly from their respective 2022 peaks to the current 2.7-2.8% level, but remains above the Fed’s 2% target. While Fed Chair Jerome Powell pointed to “modest further progress” in inflation at the recent Fed meeting, he also mentioned that policymakers remain on the lookout for “greater confidence” in inflation before loosening its policies.

Ahead, expectations are for US headline PCE to come in at 2.6% year-on-year, versus the 2.7% prior. The core aspect is expected to come in at 2.6% as well, versus the 2.8% prior.

30 June 2024 (Sunday, 9.30am SGT): China’s National Bureau of Statistics (NBS) manufacturing and non-manufacturing Purchasing Managers' Index (PMI)

China’s official May manufacturing PMI surprised markets with a reversion back into contractionary territory at 49.5. This is down from the 50.4 prior and trailed expectations for an improvement to 50.5. Non-manufacturing activities for May underperformed as well, coming in at 51.5 versus the expected 51.5 and marked its lowest level since February 2024.

The third straight month of weaker PMI data seems to suggest that the strong bounce seen in March may be just a blip and highlights the ongoing challenges for China’s economic recovery. Further downside surprises in the upcoming PMI data may serve as a warning sign for the country’s recovery, which may raise calls for more to be done to better meet its 2024 growth target of around 5%.