Brace for the World Economy’s Most Important Week of the YearBy
Trump meets Kim, Putin meets MBS, U.K. MPs vote on Brexit bill
Fed to hike, ECB to update bond plan, BOJ to keep stimulating
The world economy’s most important week of the year?
That’s what Bank of America Corp. strategists asked clients in a report ahead of five days of presidential standoffs, trade tensions and central bank meetings.
Each carries the potential to propel financial markets and shape the outlook for global growth after signs it slowed in the first quarter.
So here’s what to watch for:
Investors get their first opportunity to pass judgment on what happened at the summit of leaders from the Group of Seven. The gathering ended with President Donald Trump broadsiding allies via Twitter, undermining the bloc and potentially causing fresh friction over trade.
- Trump Shocks Leaders With Trudeau Insult to Upend G-7 Summit
- Two Tweets and an Insult Spoil G-7 Unity: Balance of Power Extra
- G-7 Summit Gets Its Communique But Only Papers Over Trade Spats
Trump and North Korea leader Kim Jong Un convene in Singapore for their on-off summit, the first such meeting ever. Trump last week predicted “great success” and said it’s possible he could sign an agreement with Kim to formally end the Korean War. 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.
- Trump, Kim Said to Be Planning One-on-One Talk at Summit Start
- These Are the Dealmakers Behind Trump and Kim
- What a Trump-Kim Deal May Look Like
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. Ministers will be trying to overturn most of those defeats, with a combination of compromises and attempts to win rebel pro-EU lawmakers round. In two days of debating and votes on Tuesday and Wednesday, the key questions are about what kind of vote Parliament gets on the final Brexit deal, and whether Britain should be trying to stay in a customs union.
- Barnier Shoots Down the Brexit Plan That May Fought to Salvage
- U.K.’s May Survives One Brexit Storm, But Flies Into Another
- U.K. Labour Seeks Soft Brexit in Bid to Force Defeat on May
The U.S. Federal Reserve is set to hike its benchmark interest rate for a second time this year. Chairman Jerome Powell holds a press conference, and he and his colleagues will also publish new projections which could show them tilting toward four increases this year as a whole, rather than the three they hinted at in March. Elsewhere, Argentina’s central bank is expected to keep its benchmark rate 40 percent as it tries to stabilize the peso.
- World’s Big-Three Central Banks to Meet With Different Agendas
- Fed Officials Signal June Hike and Caution on Inflation Progress
- Bernanke Says U.S. Economy Faces ‘Wile E. Coyote’ Moment in 2020
Also today, 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. The risks for the securities are already seen in the fact that the gap between Italian 10-year yields and those of Spain is at its widest since 2012. In the U.K., inflation data will help the Bank of England determine whether to raise interest rates.
The European Central Bank is shifting closer to the end of its bond-buying program with Thursday’s meeting of policy makers poised to hold the first formal talks on when and how to do it. About a third of respondents to a Bloomberg survey of economists predicted President Mario Draghi will set an end-date for purchases today, while 46 percent said he will wait until July to reveal details.
- Draghi’s Bond-Buying Era Seen Ending as ECB Prepares to Talk
- ECB Unflinching on QE Debate Shows It Won’t Be Italy Hostage
- Draghi’s ECB on Verge of Watershed for Its Bond Purchases
Vladimir Putin, the Russian president, and Mohammed bin Salman, the powerful Saudi crown prince, meet at the opening game of the World Cup soccer tournament. The encounter could influence the global oil market given it comes a week before a crucial OPEC meeting in Vienna, providing a last-minute chance for the two leaders to iron out a possible oil-output increase.
- Oil Trades Near $66 Amid Signs OPEC to Clash Over Supply Policy
- Saudis Signal Oil Output Boost, Offering Relief to Consumers
- U.S. Said to Ask OPEC for 1 Million Barrel a Day Output Hike
China releases retail sales and industrial production data which will shed light on the strength of the world’s second largest economy.
The Bank of Japan is likely to end the week exactly where it started with no tightening of monetary policy on the agenda. The BOJ is still buying vast quantities of Japanese government bonds and will have been encouraged to keep doing so by data showing its still far off its 2 percent inflation target and that the economy shrank in the first quarter.
- Japan’s Economy Set to Rebound From Contraction on Global Demand
- U.S. Economy Could Force BOJ’s Hand on Rates, Kuroda Ally Says
- Central Banks Must Face Financial Imbalances, Ex-BOJ Chief Says
June 15 is the deadline for the U.S. to publish the final list of Chinese products subject to $50 billion in tariffs, which could be imposed shortly after. Also today, the Russian central bank sets interest rates with economists currently leaning toward no change in the 7.25 percent benchmark although there is a chance of a cut.
- ZTE to Pay a Record Fine to Get Back in Business, U.S. Says
- Trump Ratchets Up Pressure on China With Swerve on Tariff Plans
- China’s Massive Trade Surplus Shrinks, Just Not With the U.S.
— With assistance by Emma Ross-Thomas, and Paul Dobson