By Jessica Fleetham and Fabiana Negrin Ochoa

Below are the most important global events likely to affect FX and bond markets in the week starting May 20.

Key data from the U.S., Europe and U.K. will share the stage with a raft of central bank decisions out of Asia-Pacific, as the timing of interest rate cuts stays front of mind for investors.

Provisional purchasing managers' surveys for the U.S., Europe and the U.K. will provide an important gauge of how economies have been faring. Inflation data from the U.K., Canada and Japan will also be watched.

Announcements from central banks in New Zealand, South Korea and China will keep focus on the direction of global interest rates. A U.S. Federal Reserve rate cut is seen as unlikely before September but markets view policy easing by the European Central Bank in June as nearly a done deal.

A rate decision from Indonesia and growth data from Thailand and Singapore are also on tap.


Inflation decelerated in April, broadly in line with expectations, leaving market expectations of Federal Reserve interest-rate cuts largely unchanged.

"The data generally supports hopes of interest rate cuts by the Fed, but also suggests that policy makers are in no hurry," Christoph Balz and Bernd Weidensteiner, senior economists at Commerzbank Research, said in a note.

Recent economic data may provide hope for some Fed watchers, "but we believe they underscore how far we remain from what we'd call evidence of sustainable progress in the inflation fight," Roger Aliaga-Diaz, chief Americas economist at Vanguard, said.

The U.S. economy has outperformed expectations so far this year but lately there have been some signs of it slowing. U.S. provisional purchasing managers' data for May on Thursday will provide a key indication of whether the economy is indeed starting to falter or remains robust.

Another indicator of U.S. economic activity will be durable goods orders data for April on Friday, although these figures can be volatile.

U.S. existing home sales for April are due for release on Wednesday and the final University of Michigan consumer survey for May on Friday.

There will be auctions for 20-year Treasury bonds on Wednesday and nine-year eight-month Treasury Inflation-Protected Securities, or TIPS, on Thursday.


Investors will continue to scrutinize eurozone economic data as they seek confirmation that the European Central Bank will start cutting interest rates in June, as is widely expected, while they will also look for evidence that the economy is gradually recovering.

Provisional purchasing managers' surveys for Germany, France and the eurozone due on Thursday will be a key indicator of how the economy has fared in May.

"We expect eurozone data to confirm the high likelihood of a first [ECB] rate cut in June as the momentum in quarterly wage growth probably eased further in 1Q24," analysts at UniCredit Research said in a note.

The eurozone's flash consumer confidence indicator for May will also be released on Thursday and a French business confidence survey for May on Friday.

The detailed breakdown of German first-quarter gross domestic product will be released on Friday while eurozone current account and trade data for March are due on Tuesday.

Government bond auctions are scheduled from Slovakia on Monday, Finland on Tuesday and Greece on Wednesday. Germany will sell 2029-dated federal notes, or Bobl, on Tuesday and 2034-dated Bunds on Wednesday.


Recent very strong Canadian jobs data reduced market expectations for an imminent pivot toward interest-rate cuts from the Bank of Canada.

Attention will now turn to the release of inflation data for April on Tuesday, where weaker data could reignite the prospect of lower interest rates.


The Bank of England looks likely to start cutting interest rates this summer but uncertainty remains as to whether it will be as early as June or if policymakers will opt to wait until August.

"We expect the [BOE] monetary policy committee to cut [the] Bank Rate in June, as services inflation undershoots its forecasts," Pantheon Macroeconomics said in a note.

U.K. inflation data for April, due on Wednesday is anticipated to be a key indicator which could help alleviate some of the current interest-rate uncertainty.

Provisional U.K. purchasing managers' surveys for May on Thursday will provide key clues as to how the U.K. economy has been faring in recent weeks, alongside Friday's U.K. GfK consumer confidence survey for May.

Producer price data for April are also due on Wednesday while April retail sales figures will be watched on Friday. Gilt investors will look out for public sector borrowing figures for April on Wednesday.

Various BOE policymakers are expected to speak during the week.

The U.K. is scheduled to auction the October 2043 gilt on Tuesday and the July 2029 gilt on Wednesday.


Sweden's central bank delivered its first interest-rate cut recently and focus is now on when the Riksbank will make its next cut. That puts heightened attention on upcoming data.

Swedish LFS unemployment figures for April on Wednesday will be watched for signs of how the economy is faring.

Denmark and Sweden will conduct bond auctions on Wednesday.


Hungary announces an interest-rate decision on Tuesday and Turkey on Thursday.


The Reserve Bank of New Zealand's policy meeting will be in focus on Wednesday amid expectations it will stick to the message that interest rates need to remain restrictive for some time yet.

That's despite recent data confirming that the economy remains in an extended recession and unemployment has started to rise.

Still, economists expect the RBNZ to nudge its forecast inflation track lower, downplaying the risk of a further interest-rate hike through the second half of the year.

"The RBNZ's tone is likely to remain confident that inflation will return to target in 2024" said Nick Guesnon, economist at UBS.

New Zealand trade data for April is also due on Friday*.

On Tuesday, the Reserve Bank of Australia will release minutes of its last policy meeting.

RBA Governor Michele Bullock has already said an increase formed part of the discussion, but the minutes may shed more light on just how close the central bank came to delivering its fourteenth hike in the last two years.


Eyes are on South Korea's central bank on Thursday, when policy makers are widely expected to keep rates on hold for an 11th straight meeting.

All 13 economists surveyed by The Wall Street Journal expect the Bank of Korea to hold its base rate steady at the current 15-year high of 3.50%. The bank is also expected to raise its 2024 growth forecast after first-quarter gross domestic product data surprised to the upside.

Some analysts expect the stronger 1Q GDP print to push back the timing of the BOK's policy easing. Continued uncertainty around the U.S. Federal Reserve's own policy path as well as sticky inflation at home add to the case for easing later rather than sooner. Most economists now pencil in the start of BOK rate cuts in the final quarter of this year.

"We believe that the BOK will keep rates unchanged for a considerable time," ING economists said in a note after pushing back their expectation of the first rate cut to October from July.

The magnitude of the central bank's GDP upgrade will matter for inflation implications, said HSBC economist Jin Choi. "It could shake up the board's overall monetary policy view," he said.

The meeting could also reveal the two new members' policy inclinations, and the potential effect of their arrival on the BOK's board, Choi said.


The main event in China is the central bank's announcement of loan prime rates on Monday.

After the People's Bank of China held interest rates on its medium-term lending facility steady, the LPR is widely anticipated to be kept on hold as well. The MLF is a tool the central bank uses to lend to commercial banks and acts as a guide for the benchmark loan prime rate, which is tied to mortgages and other loans.

Economists think Beijing could start easing its monetary stance soon, possibly by cutting requirements on the amount of deposits banks have to set aside in a bid to provide liquidity for commercial banks to purchase government bonds.

Data for April showed very weak credit growth, which ING's Robert Carnell and Lynn Song think might indicate that real interest rates are too high for the Chinese economy at its current strength. That could increase the urgency to lower funding costs by cutting interest rates.

UOB economists view renewed depreciation pressure on the yuan as another factor for keeping the 1-year and 5-year LPRs steady, but think the PBOC will "moderately increase monetary policy support this year against a low inflation backdrop, in order to boost the economic recovery as downside risks remain significant."

Focus on policy moves is extra sharp after the release of downbeat home-price, sales and property-investment data.

A flurry of announcements including easing mortgage requirements and the PBOC's launch of a CNY300 billion relending facility for affordable housing signal that policymakers are ramping up support for the ailing real-estate sector. But sentiment remains fragile and any statements about more policy support could swing markets.


In Japan, the main focus will be on trade data due on Wednesday and inflation figures due Friday.

The April releases will be watched for signs of how the economy is faring at the start of the second quarter. The economy contracted in the first quarter of 2024, preliminary estimates showed, extending a rough patch and signaling that inflation fueled by a weak yen is hurting consumer demand.

But some economists see room for improvement in the second quarter.

"Monthly activity data already shows a gradual normalization since March," ING economists said.

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05-19-24 1814ET