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23 May 2025,05:55

Weekly Outlook

U.S. Inflation and Consumer Data Take Center Stage; Global Markets Watch PCE, PMI, and GDP Signals

23 May 2025, 05:55

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The Week Ahead: Week of 26th May 2025 (GMT+3)

Weekly Market Preview
A series of high-impact U.S. data releases will shape this week’s market narrative, including Durable Goods Orders, CB Consumer Confidence, Core PCE Inflation, and the Chicago PMI. These reports will offer clarity on the strength of consumer demand and underlying inflation—factors critical to gauging the Federal Reserve’s next move. Elsewhere, the Reserve Bank of New Zealand delivers its latest rate decision, while Germany and China publish inflation and PMI data that may influence monetary outlooks in the Eurozone and Asia. Meanwhile, U.S. GDP and Jobless Claims data will provide additional insight into economic momentum heading into June.

Key Events to Watch:

Tuesday, May 27 – 15:30

U.S. Durable Goods Orders (MoM) (Apr)

Previous: 7.5% | Forecast: N/A | Actual: N/A

Durable goods orders surged by 7.5% in March, bolstered by strong aircraft and defense bookings. Should April’s data show another elevated increase, it may reinforce optimism over capital investment strength. Conversely, a drop could indicate softening business confidence amid rising borrowing costs. A stronger-than-expected print would likely support the U.S. dollar and bond yields, while a weaker reading could renew speculation over a potential Fed pause.

Tuesday, May 27 – 17:00

U.S. CB Consumer Confidence (May)

Previous: 86.0 | Forecast: N/A | Actual: N/A

U.S. consumer confidence slid to 86.0 in April, reflecting concerns over inflation persistence and slower income growth. If the upcoming May print rebounds, it could suggest resilience in household sentiment, lending support to risk assets and the dollar. However, a further decline may raise concerns over slowing consumption, potentially pressuring equities and Treasury yields lower.

Wednesday, May 28 – 05:00

New Zealand RBNZ Interest Rate Decision

Previous: 5.50% | Forecast: N/A | Actual: N/A

The RBNZ held rates steady in April, citing improving inflation trends and tighter credit conditions. If the central bank maintains a hawkish bias, NZD could strengthen rate differential plays. Any surprise dovish shift or hints at cuts may weaken the kiwi and push bond yields lower.

Thursday, May 29 – 15:30

U.S. GDP (QoQ) (Q1) – Second Estimate

Previous: -0.3% | Forecast: N/A | Actual: N/A

The first estimate shocked markets with a contraction, driven by trade and inventory drag despite decent consumer spending. A positive Q1 reading would signal a rebound in underlying demand and reduce expectations for rate cuts, supporting the dollar. A continued contraction, however, could revive recession fears and drive risk-off sentiment in global markets.

Thursday, May 29 – 15:30

U.S. Initial Jobless Claims

Previous: N/A | Forecast: N/A | Actual: N/A

Initial jobless claims have been trending near stable levels, signaling a resilient U.S. labor market. A lower-than-expected print would reinforce expectations of a tight labor market, strengthening the dollar and pushing yields higher. Conversely, a sharp rise could indicate emerging cracks in employment and increase market pricing for Fed rate cuts.

Friday, May 30 – 15:00

Germany CPI (MoM) (May)

Previous: 0.4% | Forecast: N/A | Actual: N/A

April’s increase reflected persistent services inflation and seasonal food effects. A higher-than-expected May reading could revive hawkish ECB speculation and support the euro, while a downside surprise would reinforce market views of a dovish policy tilt and potentially pressure EUR/USD lower.

Friday, May 30 – 15:30

U.S. Core PCE Price Index (YoY) (Apr)

Previous: 2.6% | Forecast: N/A | Actual: N/A

Core PCE inflation stood at 2.6% YoY in March, slightly above the Fed’s 2% target, showing gradual cooling in March and suggesting sticky underlying price pressures. However, the latest April CPI and PPI data point to further disinflation—headline CPI slowed to 2.3% YoY and core CPI eased to 2.8%, while PPI unexpectedly fell by 0.5% on the month. These signs of softer inflation suggest that price pressures may be easing more decisively. If this trend continues, markets may lean further into rate cut bets, putting downward pressure on the dollar and U.S. yields while supporting risk assets.

Friday, May 30 – 16:45

U.S. Chicago PMI (May)

Previous: 44.6 | Forecast: N/A | Actual: N/A

Chicago PMI remained deep in contraction territory at 44.6 in April, reflecting subdued regional manufacturing activity. A stronger May reading could indicate recovery in the Midwest manufacturing base and support optimism about broader industrial activity. A further decline would signal sustained weakness and potentially pressure the U.S. dollar and risk appetite.

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