With several impactful financial and monetary policy events expected this week, many analysts are calling the next seven days “the world economy’s most important week.”
Bank of America Corp. analysts noted the importance of the coming days in a written report to clients on Monday morning, highlighting several events that are likely to impact financial markets and currencies around the globe – for good or bad.
On Monday, investors get their first opportunity to pass judgment on what happened at the summit of leaders from the Group of Seven (G7) industrialized nations – a meeting that ended with U.S. President Donald Trump issuing a series of Tweets critical of Canada and Prime Minister Justin Trudeau.
Tuesday, President Trump and North Korean leader Kim Jong Un convene in Singapore for their on-off summit, the first such meeting ever. Meanwhile, back in Washington, the government releases a monthly report on inflation that will be a key gauge of how hot — or not — the U.S. economy is getting. And in the U.K., Prime Minister Theresa May’s flagship Brexit legislation returns to the lower House of Commons after receiving a battering in the upper House of Lords, where it was amended 15 times. In two days of debating and votes to be held on Tuesday and Wednesday, the key questions are about what kind of vote Parliament gets on the final Brexit deal, and whether Britain should remain in a customs union.
On Wednesday, the U.S. Federal Reserve is widely expected to raise its benchmark interest rate for a second time this year. Argentina’s central bank is expected to keep its benchmark rate at 40% as it tries to stabilize the peso. And, Italy’s auction of debt will draw scrutiny by handing investors another opportunity to react to the election of the populist government and its promises of hefty spending increases. In the U.K., inflation data will help the Bank of England determine whether to raise interest rates in the coming months.
Thursday, the European Central Bank’s policy makers are expected to hold the first formal talks on how to end their bond buying program. At the same time, the World Cup of soccer starts in Russia with Vladimir Putin, the Russian President, and Mohammed bin Salman, the powerful Saudi Crown Prince, meeting at the opening ceremony. The encounter could influence the global oil market given it comes a week before a crucial OPEC meeting in Vienna. And China releases retail sales and industrial production data that will shed light on the strength of the world’s second largest economy.
The week concludes Friday with the Bank of Japan expected to forgo tightening monetary policy. Friday is also the deadline for the U.S. to publish the final list of Chinese products subject to $50 billion in new tariffs, which could be imposed shortly thereafter. Also, the Russian central bank will set interest rates with economists currently leaning toward no change in the 7.25% benchmark rate.
