The Federal Reserve policy meeting is the big economic event in the coming week. On Wednesday, the Fed's Open Markets Committee (FOMC) is expected to maintain the fed funds interest rate at 5.50% at its fourth meeting of 2024.
The CME Fedwatch tool currently puts a 0% chance of a rate cut at this meeting.
Expectations for Fed rate cuts in 2024 have been revised down in recent months, having started the year with six cuts expected to now just two, with the first anticipated at the FOMC meeting in September.
There are several reasons to hold rates steady, including low unemployment at 3.9%, inflation above the 2% target, continued economic growth, and to preserve impartiality ahead of the Presidential election, said Russ Mould, investment director at AJ Bell, with an equal amount of reasons to cut, including inflation having come well below its peak, recent softening in PMI data, increased signs of sub-prime loan delinquency and the US government interest bill exceeds $1 trillion a year.
However, Mould remarked, levels of market conviction about two rate cuts this year are not especially high: "The US two-year Treasury yield has a fair track record of moving some six-to-nine months ahead of the Fed and it stands at 4.79%, a level which implies three, one-quarter point cuts in the next 24 months."
Wells Fargo economists said they also do not expect any policy changes at the meeting but "will be watching the dot plot closely for clues about the committee's policy intentions at future meetings".
"We look for the median projection in the updated dot plot to signal 50 bps of easing by the end of the year. However, we would not be surprised if the median dot shifted up to only 25 bps of anticipated rate cuts this year."
Bank of Japan
Unlike the Canadian and ECB cuts this week, the Bank of Japan decision on Friday could actually see rates hiked, though the market expects the central bank will wait until later in the year.
Recent data has included reacceleration in Japanese inflation, and recovery in retail sales and labour earnings, which all "support the view that the BoJ could raise rates earlier than the market consensus of October", said economists at ING.
"We continue to believe that it will wait for a more meaningful pick-up in labour income and private consumption next month, which will lead to a 15 bp hike at the July meeting."
The BoJ may reduce purchases of Japanese government bonds as part of its policy normalisation process.
UK jobs and GDP
UK jobs numbers are due on Tuesday, with the unemployment rate expected to remain at 4.3%.
Wage growth including bonuses is forecast to have eased to 5.5% in the three months to April from 5.7% a month earlier. Excluding bonuses average earnings are also seen softening, to 5.8% from 6%.
Employment numbers are expected to have dropped 260K in April, after a fall of 178K the month before.
The official gauge of UK economic growth is due on Wednesday, with a monthly GDP reading for April.
After March saw 0.4% month-on-month growth, April is forecast to have eased back to 0.2%, the same as February.
The three-month average is expected to pick up to 0.7% from 0.6%, though.
Industrial and manufacturing production, the index of services and trade data are also due.
Other macroeconomic events over the week:
Monday 10 June
• Japanese Q1 GDP growth
Tuesday 11 June
• UK unemployment, wage growth and vacancies
Wednesday 12 June
• UK GDP, manufacturing, construction and industrial output, good trade balance
• Chinese consumer price inflation
• US consumer price inflation, oil inventories
Thursday 13 June
• UK RICS house price index
• German wholesale price inflation
• US producer price inflation, US weekly initial unemployment claims
Friday 14 June
• Interest rate decision from the Bank of Japan