The Week Ahead: UK political upheaval likely to dominate focus as US inflation set to rise and Micron reports earnings

Central banks had their say – the BoJ and ECB hiked, while the Fed and Bank of England held steady. Now focus shifts to the UK political scene after Andy Burnham’s thumping victory in the Makerfield by-election. And market participants will be watching the latest core PCE inflation reading from the US to see if Fed chair Kevin Warsh is about to steer the FOMC towards hiking rates in July.

Here’s the key events to watch over the next week.

Monday, 22 June

The week starts with China loan prime rates and Eurozone consumer confidence among the only economic indicators of note. Canada CPI figures will be watched by CAD traders and ECB president Christine Lagarde is due to speak, potentially giving some more clues about whether the central bank is looking towards another interest rate hike. In the UK the focus is on what Andy Burnham does next as he challenges for the Labour leadership and what it means for gilts and sterling.

Tuesday, 23 June

Flash PMI surveys for services and manufacturing sectors is the focus with reports from Australia, Eurozone, UK and US coming throughout the day. Bank of England dove Swati Dhingra is due to speak – we could get more colour on why there is no need to rush into rate hikes.

MSCI publishes its annual market-classification review, with a focus on whether South Korea is added to the watchlist for developed-market status, while Indonesia could face a downgrade. FedEx reports earnings.

Wednesday, 24 June

Micron provides the latest litmus test for the strength and durability of the AI trade. The earnings report will be a gut check for chip demand and whether data centre capex can continue to power US stocks. Read our preview from Ruben here.

Australia CPI inflation and the Germany IFO business climate survey are the main macro-economic data points early in the day. The Fed unveils Wall Street bank stress test results, while the Bank of Japan releases its Summary of Opinions from its latest meeting, where it hiked rates to 1%, the highest since 1995. A raft of central bank speakers are due on the slate.

Thursday, 25 June

The big-ticket item is the monthly core PCE inflation reading – still just about the Fed’s preferred gauge of inflation, though Kevin Warsh is looking to change that. The rate is expected to accelerate to +0.3% month-on-month, bringing the annual rate to +3.4%, up from +0.2% MoM and +3.3% YoY in April. Following the Fed’s hawkish pivot higher inflation could further stoke rate hike bets. US GDP, durable goods and initial jobless claims data are also released.

Elsewhere, we hear from some more central bank speakers and the ECB publishes its Economic Bulletin. Other data of note includes Australian unemployment figures and Japan’s leading index and machine tool orders.

Friday, 26 June

The week finishes with Tokyo core CPI inflation data, figures on German retail sales and the revised UoM consumer sentiment and inflation expectations report. Fed members Williams and Kashkari are due up.