Jessica Fleetham and Amanda Lee
10 min read
Below are the most important global events likely to affect FX and bond markets in the week starting May 19.
As markets calm after the U.S. and China agreed to slash tariffs for a period of 90 days, focus is set to switch to how tariffs and the uncertainty surrounding them are affecting the global economy. U.S. purchasing managers’ index on manufacturing and services activity in May will be closely watched, alongside similar figures from the eurozone and the U.K.
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In Europe, investors will be watching trade talks between the European Union and the U.K., alongside data on U.K. inflation.
In Asia, markets will watch for progress in trade talks between the U.S. and other countries in the region, as well as key data from China and a rate announcement by its central bank.
U.S.
Purchasing managers’ surveys for May on Thursday will give an up-to-date indication of the health of the U.S. manufacturing and services sectors as tariffs increasingly start to hit companies.
So far, most official U.S. data have suggested that the economy is holding up reasonably well. However, these data are more backward-looking and don’t yet properly capture the aftermath of President Trump’s announcement of widespread tariffs on April 2. Although many of the very high tariffs have been scaled back, tariffs of 10% or more are still very high by recent historical standards.
“Global activity is still showing resilience including in the U.S. where continued frontloading is supporting the ‘hard data,'” analysts at Citi said in a note.
‘Soft data’, such as activity and confidence surveys, “paint a potentially grimmer picture, particularly in the U.S. where consumer and business confidence are still deteriorating,” they said.
Data on real estate activity are also due during the week, including existing home sales on Thursday and new home sales Friday, both for April. Weekly jobless claims will be released Thursday.
The Treasury will sell $16 billion in 20-year bonds on Wednesday and $18 billion in 10-year inflation-protected TIPS on Thursday.
CANADA
Canadian inflation data for April are released Tuesday and could be a key indicator for gauging whether or not the Bank of Canada will cut interest rates at its next meeting in June.
