Looking back to June week 3, The market experienced risk-off volatility in Asian markets as concerns grew that central banks worldwide are not finished with their tightening cycles. As we approach the upcoming week, economic data remains crucial, including PCE inflation in the US, flash CPIs across Europe, and official PMI data for China. Additionally, central bank leaders will gather at the ECB Forum on Central Banking 2023 to discuss macroeconomic stabilization in a volatile inflation environment, featuring influential figures such as Powell, Lagarde, Bailey, and Ueda.
As the week progressed, it became evident that central banks are far from finished with their interest rate hikes, leading to a risk-off sentiment in the market. Jerome Powell's testimony in front of Congress reiterated the likelihood of future rate hikes by the Federal Reserve. The UK experienced soaring inflation, resulting in the Bank of England's unexpected 50bp rate hike, raising concerns about a potential recession. Other central banks, such as the SNB and the RBA, also hinted at further rate hikes.
The upcoming week is marked by significant events and themes, including the ECB Forum on Central Banking 2023, which will gather prominent figures in the financial industry. Additionally, the US will release core PCE inflation and GDP data, Canada will report its inflation figures, and Europe will present CPI data and the IFO business sentiment survey for Germany. China's PMIs will also be closely watched, along with Tokyo's CPI report.
The annual ECB Forum on Central Banking will take place in Sintra, Portugal, attracting market attention. Key speeches are scheduled throughout the event, with a policy panel featuring influential figures like Powell, Lagarde, Ueda, and Bailey. Given the concerns regarding recessions and high interest rates in a low-growth environment, every word spoken during the event is expected to be closely scrutinized.
China's economy, which has been experiencing a slowdown, will release PMI data to determine if the government's 5% GDP target for 2023 remains achievable. Positive PMI results may restore confidence in the market, while disappointing figures could lead to anticipated stimulus measures. In Japan, Tokyo's CPI report holds significance as it may provide insights into nationwide inflation and potentially impact market expectations and the value of the yen.