The coming week will see central banks, inflation, and signals from the global cycle.

The coming week promises to be packed with macroeconomic events that will shape market sentiment, at a time when investors remain caught between signs of a slowdown in economic activity and the need to assess the extent to which restrictive monetary policies are still impacting growth and inflation. The focus will be on central banks, consumer prices, and a long series of PMI indices, which are crucial for measuring the state of the global cycle.

 

Central banks in the spotlight

The first major topic of the week will be monetary policy decisions. In the United Kingdom, the Bank of England is expected to maintain its key rate at 3.75%, with an internal vote that in previous meetings showed a marked division between hawks and more wait-and-see members. The market will also be closely watching the MPC minutes and Governor Bailey's remarks, seeking indications on the timing of any future cuts.

In Europe, the ECB is expected to keep the deposit rate unchanged at 2.00%, while the main refinancing rate will remain at 2.15%. The press conference and President Lagarde's speech will be crucial to understanding whether the institution intends to maintain a prudent stance or begin a gradual easing over the course of the year. In the background, the marginal lending facility also remains at elevated levels, with the latest benchmark at 2.40%, a sign of continuing restrictive financial conditions.

 

European inflation: slow and non-linear decline

Inflation data will receive considerable attention, especially in the euro area. In Germany, annual inflation is expected to be around 2.2%, up from 1.8% previously, while the harmonized index is expected to remain close to 2.0%. These figures indicate that the disinflation process remains fragile, particularly in the services sector.

In Italy, the annual CPI is expected to slow to 1.0% from 1.2%, while a monthly change of 0.3% is expected. At the euro area level, headline inflation is also forecast at 2.2%, compared to 2.3% previously, confirming a declining trend but still not sufficient to warrant a decisive change of pace from the ECB.

 

PMIs and leading indicators: the pulse of the real economy

The week will be marked by a flurry of PMI indices, crucial for assessing the resilience of economic activity. In Europe, the eurozone manufacturing PMI is expected to remain below the expansion threshold, around 49.4, while the services PMI is expected at 51.9, signaling moderate growth but still concentrated in the services sector.

In Germany, the manufacturing PMI remains weak at 48.7, while the services PMI remains more solid at 53.3, highlighting a strong sectoral divergence. In Italy, the manufacturing PMI is forecast at 48.5, compared to a services PMI around 51.6, confirming a fragile but not recessionary growth outlook.

In the UK, the composite PMI is expected to come in at 53.9, while in the US the ISM manufacturing index remains below 50 at 48.5, compared with a more robust ISM non-manufacturing index of 53.8.

 

United States: Jobs and Demand Under the Scrutiny

In the United States, attention will focus on the labor market. New claims for unemployment benefits are expected to be around 213,000, up slightly from 209,000 the previous month, while continuing claims are expected to remain close to 1.83 million. On the employment front, the ADP figure is estimated at 48,000 new jobs, up from 41,000 the previous month.

Completing the picture, the Atlanta Fed’s GDPNow continues to estimate annualized growth of 4.2%, helping keep the Federal Reserve on a cautious course.

 

Asia and Energy: China and Oil Under Special Watch

From Asia, Chinese PMI data remains a key benchmark. The manufacturing PMI is expected to come in at 50.2, while the services PMI is expected to come in at 51.9, indicating marginal but still uneven growth.

On the energy front, weekly U.S. oil inventories are expected to decline by around 2.3 million barrels, after the previous -0.25 million, a factor that could reignite volatility in the energy sector in the event of surprises.

 

A crucial week to calibrate expectations

Overall, the week will not be dominated by a single decisive event, but by a combination of macroeconomic data that, when read together, could redefine expectations on growth, inflation, and monetary policy. With central banks remaining cautious and macroeconomic indicators mixed, markets will remain extremely sensitive to even marginal changes, confirming a phase in which the context matters more than individual data.