Thomas Watts, Investment Analyst, abrdn Portfolio Solutions, comments on the economic data releases this week;
“Today sees Japan’s central bank release its “Summary of Opinions”, detailing both their projections for inflation and economic growth. The data is one of the primary tools the Bank of Japan (BoJ) uses to communicate its economic and monetary projections to investors.
With the solstice having passed the previous week, it is apt that we stay in the Land of the Rising Sun for the majority of the beginning of this week, as the BoJ release its Core CPI numbers on Tuesday, detailing the change in the price of goods and services purchased by consumers in Japan. With the Japanese central bank being more explicit of late, confirming that they may adjust base rates if inflation accelerates as expected and that a July rate hike is possible depending on data conditions, the release should take on added significance for investors.
It what could be a quiet second half of the week, we should expect some noise coming from Threadneedle Street as Bank of England (BoE) Governor, Andrew Bailey, is due to hold a press conference about the Financial Stability Report, in London on Thursday. Having held rates steady last week but left the door ajar for a possible rate cut in August, investors will be scrutinising all of Bailey’s future public engagements for any hints of how the BoE may vote heading into the late summer.
The end of the week should be wrapped up in the US as one of the mostly hotly anticipated data releases is made public on Friday, monthly Core PCE Price Index readings. Predicted to make quite the impact on the markets after its release, the data differs from normal inflation readings in that it only measures goods and services targeted towards and consumed by individuals. CPI readings also only covers out-of-pocket expenditures on goods and services purchased. It excludes other expenditures that are not paid for directly, for example, medical care which is usually paid for by insurance in the US. These are, however, included in the PCE. Adding even more importance to the figures is that the data is reportedly the preferred piece of data for the US Federal Reserve, using it as their primary inflation measure.”
