Below are the most important global events likely to affect FX and bond markets in the coming week, starting January 13.
U.S. inflation data will be top of the agenda in the week after recent very strong jobs data and could cause investors to scale back expectations for interest-rate cuts even further.
Focus will remain on bond markets given a recent rise in yields, particularly in U.K. government bonds. U.K. inflation data will therefore garner particular attention.
In Asia, data out of China will show whether the world's second-largest economy hit its growth target last year.
U.S.
A string of U.S. data recently, including particularly stellar jobs data for December, have shown the U.S. economy continues to go from strength to strength ahead of President-elect Donald Trump's inauguration on January 20.
Money markets are now pricing in only one interest-rate cut by the Federal Reserve this year, and this isn't fully priced in until September. This comes after the Fed downgraded its forecasts for rate cuts in 2025 at its December meeting.
In that regard, U.S. consumer-price inflation data for December due Wednesday will be particularly closely watched. Any signs that inflation is more persistent than usual could raise questions over whether the Fed might not cut rates further at all, especially given that Trump's policies are expected to be inflationary. This could be further bad news for bonds and would lift the dollar even further.
Producer price inflation data on Tuesday could also be a key indicator to watch.
"In an environment of sticky inflation the risks are increasingly skewed towards an extended pause from the Fed," ING economist James Knightley said in a note.
Any further signs that the U.S. economy is gaining traction will potentially impact rate expectations too. Retail sales data for December are due Thursday, alongside weekly jobless claims. December industrial production and housing starts data are released Friday, Jan. 17.
EUROZONE
The accounts from the European Central Bank's December meeting are due to be released Thursday and will be watched for any comments suggesting that another rate cut at the central bank's meeting later this month is likely.
Eurozone policymakers could be increasingly cautious about the outlook for inflation, however. Provisional figures showed eurozone annual inflation rose to 2.4% in December, with the closely-watched rate of services inflation also climbing, to 4.0% from 3.9% previously.
If final inflation figures due Friday, Jan. 17 confirm a similar picture, this could add to expectations that further ECB rate cuts are likely to be gradual.
"The fact that price pressures in the services sector seem to be stuck at the 4% mark strengthens the position of the monetary policy hawks in the ECB Governing Council," analysts at LBBW said in a note.
Final inflation figures are due from France Wednesday and Germany Thursday. Eurozone industrial output data for November are released Wednesday.
Government bond auctions will come from Italy on Monday, the Netherlands Tuesday, Greece on Wednesday and Spain on Thursday. Germany will launch the new April 2030 federal note, or Bobl, for 5 billion euros on Tuesday and will offer 2.5 billion euros in 2053- and 2054-dated Bunds on Wednesday.
Issuance via syndication is also expected, with Ireland, Austria, Greece and Spain among the major candidates, according to Commerzbank Research strategists.
U.K.
U.K. markets will be watched closely after yields on U.K. government bonds shot higher in recent days, with the 30-year yield hitting its highest since 1998, and sterling fell in response.
Concerns about U.K. public finances, persistent inflation despite a weak economy, and hefty government-debt issuance at the start of the year are all contributing to push gilt yields particularly high. The rise in gilt yields comes as yields rise globally, including in the U.S. and the eurozone.
U.K. data in the coming week, especially inflation, as well as auctions of U.K. government bonds will therefore be scrutinized closely.
U.K. consumer-price and producer-price inflation data for December are released Wednesday.
"The coming week's focus will be on U.K. CPI inflation, even more so with the recent bond selloff partly due to last mile inflation concerns," Nomura economists said in a note.
Any data suggesting the U.K. economy is struggling would be an additional worry, especially if high inflation looks likely to limit how much the Bank of England can cut interest rates. U.K. money markets currently price in just under two rate cuts for 2025.
The estimate for November gross domestic product is released Thursday, alongside industrial production data for November. December U.K. retail sales data are due Friday, Jan. 17.
Previous data showed the U.K. economy shrank by 0.1% during October. This leaves a risk of an outright decline in quarter-on-quarter GDP during the fourth quarter, which would "add to the gloomy narrative around the current performance of the economy," Investec economist Sandra Horsfield said in a note.
The U.K.'s Debt Management Office will auction 1 billion pounds in index-linked gilts maturing in 2025 on Tuesday, then 4 billion pounds in gilts maturing in 2034 on Wednesday.
SCANDINAVIA
Swedish inflation data for December are due Wednesday.
Sweden and Norway will sell government bonds, also on Wednesday.
CHINA
A big week awaits in China, with markets watching to see if Beijing hit its economic growth target of around 5% for 2024.
Trade figures for December get the ball rolling on Monday, and will be watched to see if exports recovered from November's unexpected slowdown. China's export strength holds even more importance in the context of rising trade protectionism, which threatens to curb a key growth driver for the economy.
Economists polled by The Wall Street Journal said outbound shipments likely rose 7.4% on year in December, accelerating from November, in part to due to front-loading of exports ahead of U.S. tariffs. Imports are expected to have declined 1.2% on year, bringing the trade surplus to an estimated $99.75 billion.
Wednesday features an interest rate announcement by the People's Bank of China, which comes amid repeated pledges that it will keep easing monetary policy to help boost the economy.
That will be followed by a deluge of data on Friday, Jan. 17, which economists in the WSJ poll expect to show that Beijing hit its gross domestic product growth target for 2024.
GDP growth likely picked up to 5.1% in the fourth quarter of 2024, thanks to Beijing's stimulus push, the economists said. Other data releases could show stabilizing consumption, investment and industrial output, adding to evidence that the stimulus blitz is having an effect.
Retail sales, a proxy for consumption, are expected to have risen 3.5% on the year last month, compared with November's 3.0% increase. Fixed-asset investment likely climbed 3.3% last year, matching the pace seen in the January-November period. Industrial production is expected to have risen 5.4% last month, the same as November.
Housing price and property investment data will also be looked at for signs that the protracted real-estate slump is turning a corner, though expectations for a sustained improvement are low.
Focus will also be on further efforts to prop up the beleaguered yuan, which has come under renewed pressure from trade risk concerns and dollar strength. Further drops in Chinese government bond yields will also be watched after the central bank said it will suspend bond purchases in a move widely seen as signaling mounting concern about the overheated bond market.
JAPAN
On Tuesday, focus will be on Bank of Japan Deputy Gov. Ryozo Himino's meeting with local leaders in Kanagawa, where he's slated to give a speech that may provide clues on whether the Japanese central bank will raise rates later this month.
After taking recent events such as BOJ Gov. Kazuo Ueda's speech in late December into consideration, Morgan Stanley MUFG Securities maintains its base-case projection for the Bank of Japan to hike its policy rate in January, the brokerage's economists say in a research report. Based on a local media report at end-December, some BOJ officials appear to view "a Jan rate hike as quite possible," the economists said.
Japan's economy watchers survey for December, due Tuesday, could provide further evidence that the Japanese economy is making progress toward stable growth backed by demand. SMBC Nikko Securities' economists said sentiment among those who work in economy-sensitive sectors, such as tax drivers and hairdressers, likely improved thanks to strong spending by foreign tourists and higher winter bonuses.
The current account balance for November is also scheduled for release on Tuesday. Economists polled by data provider Quick expect a surplus of 2.692 trillion yen, compared with the 2.457 trillion yen surplus in October. The Bank of Japan's consumer sentiment survey is due Friday, Jan. 17.
The Ministry of Finance is scheduled to auction 2.3 trillion yen of five-year sovereign notes on Tuesday and 1 trillion yen of 20-year government bonds on Thursday. The auction of super-long-dated securities could garner interest from Japanese investors such as insurance companies and pension funds which typically favor them because of their higher yields.
Japanese markets are closed on Monday for a national holiday.
AUSTRALIA
Australian money markets have priced in a strong probability that the Reserve Bank of Australia will start to lower official interest rates in February, but that could be tested next week.
The country's job market has continued to roar despite persistently elevated interest rates, strong migration inflows, and a sharp slowdown in the economy.
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01-12-25 1614ET