Inflation refused to cool in April. This week, markets find out if May was any different and two central banks will be watching just as closely as we are.

US CPI and PPI, along with rate decisions from the Bank of Canada and European Central Bank all land within days of each other, setting up a consequential week for FX, bonds, and equities.

Calendar Events

  • Japan Final Q1 GDP – Jun. 8
  • China CPI – Jun. 10
  • US CPI – Jun. 10
  • Bank of Canada Interest Rate Decision – Jun. 10
  • European Central Bank Interest Rate Decision – Jun. 11
  • US PPI – Jun. 11
  • UK Monthly GDP – Jun. 12
  • US University of Michigan Prelim Consumer Sentiment

Top Things to Watch

Markets Brace for More Rate Volatility After Tech-Led Selloff

Wall Street ended last week under heavy pressure after a strong May labor market report brought back expectations of a more hawkish Federal Reserve.

Technology and AI-related stocks were hit the most on Friday, as rising short-term rate expectations pressured high-growth companies and raised fresh doubts over whether heavy AI CAPEX will deliver strong returns.

The Nasdaq 100 tumbled more than 4%, suffering its worst day since April 2025, while the S&P 500 dropped more than 2%, marking its weakest session since last October.

Looking ahead, strong labor data and persistent inflation give the Fed no reason to consider rate cuts anymore, while rate-hike risks are brought back to the table.

Oil Faces a Tense Week as Hormuz Risks Stay in Focus

Oil enters the week caught between supply risks and renewed uncertainty, with traders closely watching the US-Iran conflict and any progress toward fully reopening tanker traffic through the Strait of Hormuz.

Tight inventories and unresolved shipping risks leave the market vulnerable to fresh supply shocks.

At the same time, OPEC+ has approved another July output quota increase, though the impact could be limited if Gulf exports remain disrupted. This keeps the focus less on production targets and more on whether physical barrels can actually reach global buyers.

US Inflation Watch: CPI and PPI Keep Pressure on the Fed

April’s inflation print left little room for comfort. Headline CPI came in at 3.8% annually, with monthly gains of 0.6%, while core CPI held firm at 2.8% YoY.

Producer prices told the same story, with PPI surging 6% year over year. This week’s CPI and PPI releases will show whether May brought any relief.

If price pressures remain sticky, traders might expect Treasury yields to stay elevated, Fed rate cut bets to fade further, and equities and gold to feel the strain.

BoC Decision Day: Inflation, Tariffs, and the Road Ahead  

A hold at 2.25% is widely expected from the Bank of Canada on Wednesday, but the rate decision itself may be the least interesting part.

Canada’s economy is caught between slow growth, lingering tariff uncertainty, and oil prices that cut both ways, supportive for the energy sector and the loonie, but a potential inflation risk through higher fuel and input costs.

The real market focus will be on the tone. How the BoC frames the balance between inflation risks and growth weakness will signal whether rates stay on hold for the foreseeable future, or whether the next move is closer than markets currently expect.

One and Done or Just the Beginning? The ECB’s June Call

Eurozone inflation hitting 3% after April’s hold at 2.15% has put the ECB in an uncomfortable spot. A rate hike on Thursday is now widely anticipated, but the decision itself is only half the story.

Growth across the bloc remains fragile, leaving policymakers walking a fine line between tackling inflation (still well above the 2% target) and avoiding a policy stance that chokes an already weak economy.

What markets really want to know is whether June is a one-off response to energy-driven price pressures, or the opening move in a more sustained tightening cycle.