What To Expect In The Markets This Week

  • The speaker of the US House of Representatives and US President Joe Biden will hold a meeting today to discuss the issue of raising the US debt ceiling. Markets await any decisions on whether the United States government can agree to raise the debt ceiling.


  • On Tuesday 23-05-23, PMI data for services and manufacturing in the US, Europe, and the UK are set for release. This data is widely considered an important indicator that reflects the health of the economy, reflecting the performance of companies in these sectors and the economy as a whole.


  • New Zealand's central bank will announce its latest interest rate decision on Wednesday, with expectations of a 25 basis points hike to reach a range of 5.50%.


  • UK inflation data will be released on Wednesday. Expectations indicate that consumer prices will decline to 8.2% after rising by 10.1% in April.


  • Markets are also awaiting the minutes of the Federal Reserve's meeting on Wednesday. The meeting minutes presents a detailed record of the Fed’s last meeting and provides important signals for economic and financial conditions, along with hints about Fed’s future path for interest rates.


  • Finally, markets await the release of Core PCE data, with expectations of a 0.3% rise from last month’s reading. The data is an important inflation indicator, with consumption being the main driver of the economy and representing around two-thirds of US GDP.


Other Headlines This Week:


Latest global growth estimates indicate that this year, the global economy will grow at its third weakest pace in around 30 years. The International Monetary Fund indicates growth estimates at 2.8%, while the World Bank expects global growth to slow to 1.7%. Meanwhile, the United Nations forecasts the global economy to grow by 2.3% this year. Each of these estimates stand well below the average growth rate of 3.1% for the previous two decades.


Economists from JP Morgan commented that declining global growth estimates stem from the tighter monetary policies from central banks worldwide to control high inflation. They warned that immediate measures are needed to enhance growth and mitigate the risks of a global economic downturn, especially for developing countries that depend on trade and external financing.


The reports added that new shocks such as higher than expected interest rates, US banking issues, and the United States’ inability to pay its debts will make a recession almost certain. The upcoming months could be a difficult period for the global economy unless further measures are taken to soften the economic impact of rising interest rates.



Figure 1: Global Growth Figures, Source: US Department of Labor, Bureau of Labor Statistics



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