Weekly Market Outlook – Key Events to Watch

This weekly market outlook dives into the global macro landscape for June 2–7. Markets brace for the U.S. Nonfarm Payrolls (NFP) report, a pivotal ECB rate decision, and critical inflation data. Last week, investors navigated mixed signals on inflation, growth, and central bank policy, which continue to steer sentiment globally. Last week, markets digested a slew of inflation and central bank signals, setting the stage for pivotal data this week—especially the U.S. Nonfarm Payrolls (NFP) and the ECB rate decision. U.S. data showed sticky inflation but softening consumer momentum, while Fed officials maintained a cautious tone on rate cuts. In Europe, disinflation progressed, fueling expectations of the ECB delivering its first rate cut. Meanwhile, in China and Japan, growth indicators remained mixed. EM sentiment was supported by softer U.S. yields and stronger oil prices.

🇺🇸 Weekly Market Outlook – U.S. Focus

Previous Week (May 27–31):

• PCE Inflation (Apr): Core PCE rose 0.2% MoM, keeping the annual rate at 2.8%, matching expectations. It provided modest relief to markets still wary of persistent inflation.
• GDP Q1 (Second Estimate): Revised down to 1.3% from 1.6%, reflecting weaker-than-estimated consumer spending.
• Fed Speakers: Broad consensus remains—more evidence is needed before any rate cuts. Bostic and Williams leaned cautious.
• Markets:
  • S&P 500: +1.8%
  • UST 10Y Yield: -7 bps to 4.49%
  • USD Index (DXY): -0.6%

This Week (June 2–7):

• Key Data:
  • JOLTS (Tue) – labor demand watch.
  • ADP Employment (Wed)
  • ISM Services PMI (Wed)
  • NFP & Unemployment Rate (Fri): Forecasts: +177K jobs, 4.2% unemployment. A hotter print could renew rate-hike bets.
• Outlook: Employment data will be pivotal. A soft print may revive dovish Fed bets into June/July.

🇪🇺 Euro Area

Previous Week:

• Flash CPI (May): Headline inflation rose to 2.6% (from 2.4%), while core inflation accelerated to 2.9%. Services inflation remains sticky.
• ECB Commentary: Despite the CPI uptick, officials (Villeroy, Lane) signaled strong support for a June rate cut.
• Markets:
  • EuroStoxx 50: +0.9%
  • Bund 10Y Yield: -2 bps to 2.63%
  • EUR/USD: +0.7%

This Week:

• ECB Decision (Thu): Market is pricing in an 85% chance of a 25 bps rate cut to 2.25%.
• PMIs (final) and Retail Sales (Thu) also due.
• Outlook: First cut is likely baked in; focus shifts to forward guidance. Any hint of a July move will shake bond markets.

🇬🇧 UK Outlook – Caution Persists

Previous Week:

• No major data releases.
• BoE’s Pill: Warned inflation progress is uneven; rate cuts not imminent.
• Markets:
  • FTSE 100: +0.5%
  • GBP/USD: +0.6%
  • 10Y Gilt: -3 bps to 4.20%

This Week:

• Final PMIs (Mon & Wed)
• BoE Speakers: Multiple appearances including Haskel, Dhingra.
• Outlook: With inflation moderating but wage growth sticky, BoE remains in “wait-and-see” mode ahead of August.

🇨🇳 China Macro View – Stimulus Hopes Rise

Previous Week:

• PMI Data (May):
  • Manufacturing PMI: Fell back to 49.5 (from 50.4)
  • Non-Manufacturing: 51.1 → signals soft services sector momentum.
• Markets:
  • Shanghai Composite: -0.3%
  • Yuan: +0.2% vs USD

This Week:

• Caixin Services PMI (Wed)
• Trade Balance (Fri) – expected strong exports.
• Outlook: Weak PMI increases pressure on Beijing for stimulus. Market awaits fresh fiscal support headlines.

🇯🇵 Japan

Previous Week:

• Tokyo CPI (May): Slowed to 1.9% YoY from 2.2%, reinforcing BoJ’s dovish stance.
• Unemployment Rate: Tick higher to 2.7%.
• Markets:
  • Nikkei 225: +2.1%
  • USD/JPY: +0.9% to 157.1
  • 10Y JGB: +1 bps to 1.00%

This Week:

• BoJ Minutes (Mon) – for clues on potential July move.
• Household Spending (Fri)
• Outlook: Yen remains under pressure; FX intervention risks grow if 160 is breached.

🌍 EMEA & Others

Previous Week:

• 🇹🇷 Turkey: April Trade Deficit narrowed to $9.86B; USD/TRY slightly firmer at 32.27.
• 🇧🇷 Brazil: Mid-May inflation cooled slightly to 3.7% YoY.
• 🇿🇦 South Africa: ANC lost parliamentary majority; Rand volatile on coalition uncertainty.

This Week:

• Turkey: May inflation due (Mon) – expected to peak near 75%.
• South Africa: Political negotiations ongoing; watch ZAR volatility.
• EM FX: Rebounded modestly as U.S. yields fell.