The week ahead
The forthcoming week presents crucial economic events that could reshape monetary policy expectations and market sentiment across major economies. Both the Federal Reserve (Fed) and Bank of Japan (BOJ) convene pivotal interest rates meetings on Thursday.
US core consumer price inflation has accelerated to 2.9% YoY in June, as high tariff impacts begin manifesting in goods including appliances and apparel. Meanwhile, the employment market maintains resilience as evidenced by the reduction in jobless claims. Despite mounting pressure from the Trump administration on Chair Powell to reduce rates, we anticipate the policy rate will remain at the current 4.25%-4.50% range, while closely monitoring statements for guidance on the possibility of two rate cuts in the remainder of 2025.
China’s dual PMI readings will offer essential insights into the world’s second-largest economy, with official National Bureau of Statistics (NBS) data on Thursday and private Caixin manufacturing figures on Friday, revealing whether recent stimulus measures are gaining traction amid persistent trade headwinds.
A comprehensive suite of US employment indicators, including Job Openings and Labor Turnover Survey (JOLTS) job openings and the closely-watched non-farm payrolls report, will provide critical perspectives on labour market dynamics that remain central to Fed policy considerations.
On the corporate front, earnings season reaches its crescendo with four members of the Magnificent Seven (Microsoft, Meta, Apple and Amazon), alongside major European banking institutions, reporting results that could significantly influence market sentiment and sectoral rotation trends heading into August.
Figure 4: US unemployment rate vs. core inflation