Market Highlights for the Week: Inflation and Employment


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Next Friday’s U.S. jobs report will mark the climax of a holiday-shortened week as markets try to clear uncertainty over the exact date when interest rate cuts could begin. Comments from Federal Reserve Chairman Jerome Powell will be closely watched, as will the minutes of the U.S. central bank’s last meeting on Wednesday. Also, elections in France and the U.K. will keep markets on edge. Here is a summary of what will happen in the main markets this week.

U.S. employment data 

Investors will pay particular attention to Friday’s nonfarm payrolls report, awaiting further details about the start of interest rate cuts by the Federal Reserve. The U.S. economy is estimated to have added 189,000 jobs in June, down from 272,000 the previous month, highlighting the resilience of the labor market. The Fed kept rates unchanged at the start of June and delayed the start of rate cuts until as late as December, hunting for signs that inflation is returning to the central bank’s target or evidence that the labor market is cooling. A report on Tuesday, ahead of the nonfarm payrolls release, is expected to show that job openings declined again in May, indicating that companies are managing to fill more jobs.

Remarks by Powell and Lagarde; Fed minutes. Federal Reserve Chairman Jerome Powell will attend the European Central Bank’s annual forum in Sintra, Portugal, on Tuesday. Powell, accompanied by ECB President Christine Lagarde, will participate in a panel discussion devoted to “monetary policy in an era of transition,” where investors will be on the lookout for new ideas on the future path of interest rates. Inflation is in retreat after peaking in the first quarter, although it remains ahead of the Fed’s 2% target. In addition, the minutes of the Fed’s June meeting will be released on Wednesday, which will discuss the central bank’s outlook for the economic outlook and factors affecting monetary policy expectations.

Eurozone inflation 

The Eurozone will release June inflation data on Tuesday, coinciding with Germany’s report on Monday. Economists anticipate a slight slowdown in both headline and core inflation, following May’s rise. The ECB will release the minutes of its June meeting on Thursday, at which it cut interest rates for the first time since September 2019. Despite the ECB’s later start to raising rates, the June cut put it ahead of the Fed in its downward trend, as the world’s largest central bank continues to be hampered by above-target inflation.

China PMI

Official data on Sunday showed manufacturing activity in China declined for a second straight month in June as services activity fell to its lowest level in five months, raising calls for more support as the world’s second-largest economy struggles to gain traction. The Caixin manufacturing PMI, due for release on Monday, is expected to fall slightly. Analysts say China will implement more short-term support measures, with the government’s pledge to strengthen fiscal stimulus expected to help boost domestic consumption.

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