Last week, the central banks of the US, Eurozone, and the UK made the unanimous decision to maintain their current interest rates, sparking a global surge in equity markets on hopes that the severe tightening cycle has come to an end. In the US, the S&P 500 achieved its lengthiest weekly winning streak since 2017, boasting seven consecutive weeks in positive territory. Simultaneously, the Dow Jones celebrated a record-high close for the third straight session on Friday. Despite these triumphs, each of these economies faces a formidable challenge with impending inflation data this week.
On Tuesday, the Eurozone will unveil its inflation data, with market projections anticipating a decline from 2.9% to 2.4% in the year-over-year figure and a parallel deceleration in core inflation from 4.2% to 3.6%. The battle against inflation persists in the UK, and Wednesday’s release holds crucial importance for the Bank of England’s future decisions. The consensus points to a decrease in the year-over-year figure from 4.6% to 4.4%, with a corresponding drop in core inflation from 5.7% to 5.5%. Finally, the US will conclude the week with the Core PCE Price Index, expecting a decrease in the year-over-year figure from 3.5% to 3.4%.
As the market yearns for a shift away from aggressive monetary policy tightening, these upcoming releases could profoundly influence participants’ sentiments in the days ahead.
Sources: Koyfn, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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