Markets are eagerly looking forward to some major central bank speakers this week. Hints of recession fears, continuously rising inflation, and possibly stagflation are all on the agenda. The Eurozone inflation numbers may increase further due to high oil prices and eyes will be on the US PCE (the FED’s favorite index to measure inflation).

Major Indices in the US and Europe rallied this week as selling pressures have decreased with some sellers opting to exit the market. The SP500 and the EU50 indices have closed in the green for the first time in three weeks.
 
Oil prices fell by 3% last week on Friday as fears of demand drawdowns caused by a possible US recession increased. Investors are looking for more clarity from the OPEC meeting this week that could hint at further plans for policy changes when it comes to production quotas in the future.

Economic data highlights

Monday 27^th of June

• German Retail Sales
• US Durable Goods Orders

Tuesday 28 of June

• German CPI
• ECB – President Lagarde speaks
• Japanese Retail Sales
• Australian Retail Sales

Wednesday 29 of June

• FMOC member Mester speaks
• US – GDP Q1
• FED Chair Powell Speaks
• ECB – President Lagarde speaks
• BOE – Gov Bailey speaks
• Chinese PMI

Thursday 30 of June

• UK – GDP Q1
• Swiss Retail Sales
• EU – Unemployment Rate
• OPEC Meeting
• US PCE Price Index
• Canadian GDP
• Japanese CPI

Friday 1 of July

• EU – PMI
• EU – CPI
• US – PMI

 
With the FED’s “unconditional” commitment to bring the US inflation rate down to 2% markets are nearly certain of more rate hikes on the horizon. A further 75BP increase in July and more hikes into the year-end could potentially trigger a recession in the US next year.
 

Central Banks Heads Speak

 
On Wednesday, investors will tune in to hear the FED chair, the ECB president and the BOE governor speeches. While markets may not be waiting a lot from the FED chairman’s speech due to his reiterations this week of targeting high inflation levels even if it led to a recession. Markets would try to get more clarity about the ECB policy in terms of possible rate hikes until the end of 2022, and the same from the BOE governor especially with inflation levels in the UK hitting a 9.1% in the month of May. investors may need to know if the ECB and BOE would follow the FED’s stance in fighting high inflation levels no matter what it may cause to the economy.
 

Inflation Data

On the US data front traders will be awaiting for the release of the PCE price index data on Thursday, while the Eurozone focus will be on the CPI read coming on Friday. The month of June print is expected to come in at 8.3% compared to 8.1% in the month of May. The main reason behind these elevated inflation levels are high energy prices due to the European embargo on Russian energy.