Events to Look Out for Next Week

Andria Pichidi

June 16, 2023

The focus next week will be on central banks again: in China the PBoC is expected to continue what it started last week with its cut to the repo rate and the 1-year MLD rate by tweaking the official one -currently at 3.65% – and providing further stimulus. In the UK, the BoE is expected to hike again after the latest strong UK jobs data and not even a surprise in the CPI data on Wednesday seems to be able to stop it. Also on the European continent, the Swiss SNB is expected to rise.

Finally on Friday, in addition to a view on the health of the UK consumer through Retail Sales, there will be PMI data for June in the EU, US and UK, a typical leading indicator that is likely to confirm the divergence between the service and manufacturing sectors around the world.

Tuesday – 20 June 2023

PBoC Interest Rate Decision (CNH, GMT 01:15) –After trimming the repo rate by 0.1 percentage points to 1.9% and the medium-term lending rate from 2.75% to 2.65% last week, the People’s Bank of China is broadly expected to cut its main interest rate from the current 3.65% level.
Monetary Policy Meeting Minutes (AUD, GMT 01:30) – The RBA minutes should provide guidance on the pace for further aggressive rate hikes to quell still very elevated inflation rates.

Interest Rate Decision & Statement & Press Conference (CHF, GMT 07:30) –The SNB also remains on course to deliver another hike at this meeting.. Producer and import price numbers this week are likely to confirm that external price pressures are easing, although domestic price pressures are now more of a worry, not just in Switzerland. SNB President Jordan said last week that “The fight against inflation is not over yet — we need to make sure we bring it back below 2% in the long term,” supporting expectations for another hike after the 50 bp increase in March.
Event of the Week – Interest Rate Decision & Statement & Press Conference (GBP, GMT 11:00) – The strong wage numbers have fueled speculation that the BoE will continue to hike rates through to the end of the year. Although the economy may escape recession this year, it is hardly booming, and if surveys are anything to go by the labour market is less tight than it was earlier in the year. Base effects should also bring inflation down although next week’s inflation report will still show core substantially above target. The BoE may want to stop the tightening cycle earlier rather than later, but central bankers have persistently underestimated inflation over the past months and it is increasingly difficult for the BoE to keep a lid on market expectations. Futures are pricing in a year end rate of 5.75% and mortgage rates have already started to move higher again, which is not helping the beleaguered housing market. Sterling is benefiting from speculation of further substantial hikes from the BoE. As long as markets don’t see a serious improvement in inflation numbers, they will ignore any cautious words from Bailey next week.

Friday – 23 June 2023

Retail Sales (GBP, GMT 06:00) – UK Retail Sales for May are expected to contract, implying a -4.4%y/y ex-Fuel reading and a headline at -4.4% y/y.
Markit PMIs (EUR, GMT 07:30-08:00) – The prelim. Eurozone & Germany Services for June are expected to improve slightly with the Manufacturing sector however still in contraction, leaving the Eurozone S&P Global Composite PMI at 53, up from 52.8.
Markit PMIs (GBP, GMT 08:30) –UK Preliminary PMI readings for June are expected to show slight declines in both the Services and Manufacturing sectors with the latter falling to 46.9 as the divergence between the services and manufacturing sectors continues.
Markit PMIs (USD, GMT 13:45) – June’s prelim. Services PMI in the US is expected to improve at 55, up from 54.9 in May, while Manufacturing PMI is seen at 47.9 from 48.4.

Click here to access our Economic Calendar

Andriaq Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.