By Dow Jones Newswires staff
Below are the most important global events likely to affect FX and bond markets in the week starting May 11.
U.S. inflation will be the highlight of economic data during the week as investors gauge the outlook for interest rates in the coming months.
Focus will also center on U.S. President Trump's visit to China and his expected summit with Chinese leader Xi Jinping, as investors watch for signals on trade, artificial intelligence, and tensions in the Middle East.
Inflation and gross domestic product data are also due in Europe. In Asia, Australia's budget and employment data will be key for central-bank watchers, while comments from the Bank of Japan will be monitored for clues on its outlook for monetary policy.
U.S.
U.S. consumer-price data for April on Tuesday will be keenly watched by investors as they continue to assess the impact of higher energy costs and the chances of the Federal Reserve cutting interest rates in the coming months.
Inflation is expected to have risen, driven largely by higher gasoline prices due to the Middle East conflict. Investors will be keen to see the extent to which higher energy prices have fed through into consumer inflation more broadly.
The data will be particularly important after U.S. nonfarm payrolls data showed the economy added double the number of jobs than had been expected last month, adding to recent evidence of a resilient economy and leaving the potential that greater demand could be fueling inflation.
"For incoming Fed Chair Kevin Warsh, these [jobs] numbers are likely to kill off any prospect of a near-term rate cut," said Nick Rees, head of macro research at Monex, in a note.
"A resilient labor market raises the risk that rising energy costs will translate into a broader-based increase in price growth."
U.S. money markets on Friday priced a 16% chance of a 25 basis-point rate reduction by September, LSEG data showed.
Wednesday will also see the release of producer-price data for April, which will give an indication of pipeline inflationary pressures.
Other data include April existing home sales figures Monday. Retail sales data for April on Thursday will give signs of whether consumers are confident enough to spend despite higher energy prices. Weekly jobless claims are also due Thursday, followed by industrial production figures for April on Friday.
The U.S. Treasury will auction $58 billion in three-year notes on Monday, $42 billion in 10-year notes on Tuesday and $25 billion in 30-year bonds on Wednesday.
Canada
Canadian existing home sales for April are due Thursday, followed by April housing starts on Friday.
Eurozone
The eurozone's data calendar will be light, while Ascension Day on Thursday will be a public holiday in a number of countries.
Final German inflation data for April as well as the ZEW economic sentiment indicator for May will be released on Tuesday. On the same day, Italian industrial production data are due for March.
Final French CPI for April is due Wednesday. Eurozone industrial production data for March, second estimate GDP for the first quarter, and flash estimate employment data also for the first quarter will be released Wednesday.
Final April CPI data for Spain is scheduled for Thursday and for Italy on Friday.
Germany will auction June 2028 Schatz on Tuesday as well as May 2047 and August 2054 Bunds on Wednesday.
Other bond issuers will be the Netherlands on Tuesday, and Italy and Portugal on Wednesday.
U.K.
In the U.K., gilt and sterling investors will continue to scrutinize the fallout from recent local elections, where Prime Minister Keir Starmer's Labour Party suffered large losses.
"The key question for markets is whether the position of PM Starmer will be weakened enough for him to make way for a more left-wing Labour politician," said Investec economist Sandra Horsfield in a note.
"Fears that spending could rise beyond what markets consider prudent would likely rattle not just bonds but also sterling, which has been fairly resilient lately," she said.
If Starmer avoids a leadership challenge, Wednesday's King's Speech could be an opportunity for him to lay out his plans to improve his party's fortunes.
In terms of economic data, the first-quarter gross domestic product figures on Thursday will be the highlight. It follows purchasing managers' surveys, which have pointed to a reasonably robust economy. Industrial production and trade data for March will also be released Thursday.
The BRC's April retail sales monitor is released Tuesday, followed by the RICS house-price survey, also for April, on Thursday.
The U.K. will sell March 2031 gilts via auction Tuesday.
Scandinavia
Norwegian inflation data for April are due on Monday. They come after the Norges Bank recently raised interest rates to 4.25% and flagged the possibility that rates could rise further as the central bank attempts to put a lid on elevated inflation.
Sweden's final April inflation data are released Wednesday. The Riksbank recently held its key policy rate at 1.75%, although it pledged to remain vigilant about the risks of inflation rising due to high energy prices.
Norway will hold a bond auction on Wednesday.
Switzerland
Switzerland will hold a bond auction on Wednesday.
China
All eyes are on Trump's visit to China, where he is set to meet Chinese leader Xi Jinping. Markets will be closely watching for any announcements on trade, AI, tariffs and the war in Iran.
Contentious geopolitical issues are set to dominate the summit, and Citi analysts think it is plausible the meeting might accelerate a resolution of the Middle East conflict. On the economic front, they expect the agenda to reinforce short-term stabilization in bilateral relations.
Beijing is also set to release April inflation data on Monday. According to a Wall Street Journal poll of economists, consumer price growth is expected to have cooled slightly to 0.8% on year, while the producer price index is forecast to have vaulted higher to 1.7%.
DBS economists said producer prices likely rose on the back of higher raw-material costs, which tend to correlate closely with oil prices that have surged amid the Middle East conflict.
Consumer prices, meanwhile, are expected to remain relatively contained, they added.
Authorities are also set to release money supply data on Tuesday. ANZ economists expect the figures to show that liquidity conditions remain ample.
Japan
A data-light calendar is in store for Japan, narrowing focus on the yen as speculation about intervention continues to swirl and markets look for a potential visit by U.S. Treasury Secretary Scott Bessent.
Household spending data on Tuesday is the sole release of note, with focus then turning to the Bank of Japan's summary of opinions and then to Wednesday's economy watchers survey published by the Cabinet. That aside, markets will keep watching yen moves closely after excess volatility led many to suspect intervention by authorities.
On Thursday, eyes will be on any remarks from Bank of Japan policy board member Kazuyuki Masu, who is set to attend a meeting with business association Keizai Doyukai.
Bond traders will look at the BOJ's outright purchases across multiple sectors of Japan's government bond market on Monday. These include sovereign securities with maturities of more than one year and up to three years, more than 10 years and up to 25 years, and more than 25 years.
On Tuesday, the finance ministry is scheduled to auction about 2.6 trillion yen of 10-year JGBs, followed by around 600 billion yen of 30-year sovereign debt on Thursday. The 30-year bond will be a reopening of the April 2026 issue, the ministry said. Both auctions could attract solid bidding interest from investors amid falling crude oil prices and easing inflation concerns.
Australia/New Zealand
Australia's 2026-27 federal budget on Tuesday will be a key focus for markets, helping shape views on whether the Reserve Bank of Australia is likely to implement further interest-rate increases.
Treasurer Jim Chalmers has said the budget will contain 64 billion Australian dollars in spending cuts, but there is still scope for new spending to be announced. If that spending targets cost-of-living relief for households, the budget might be judged as inflationary.
Significant budget deficits are still expected into the future, with a large government bond issuance plan likely to be announced for the year ahead.
Later in the week, Australia's employment data for April will also be a critical moment for money markets. The RBA has already raised interest rates three times this year and remains hawkish, but a big rise in unemployment would limit its scope for further tightening.
For now, the job market is considered to be tight, with the unemployment rate low by historical stands at close to 4.0%.
India
India is scheduled to release April consumer-price index data on Tuesday, a print that will be closely watched for signs of broadening inflationary pressures driven by the war in the Middle East.
CPI growth accelerated in March as oil and gas prices increased but a preceding period of low inflation suggests that policymakers have time before they begin to worry.
Economists at DBS expect headline inflation to have jumped to 3.9% in April from 3.4% the month before, edging closer to the midpoint of the central bank's target range.
However, they expect a modest, stable print for core inflation, which strips out some volatile items.
"The broader impact of high global oil prices has yet to percolate through retail inflation as pump fuel prices remain unchanged," DBS's economics team said.
The rise in import costs on account of high commodity prices and a weak rupee is likely to be more apparent in the WPI gauge, which captures the average movement of wholesale prices of goods.
Malaysia
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05-10-26 2014ET
