The week ahead in markets and economics

As global markets navigate a landscape marked by geopolitical tensions, shifting monetary policy, and persistent inflationary pressures, this week’s economic data releases across developed markets are poised to play a pivotal role in shaping investor sentiment and influencing equities, bonds, and interest rate expectations.

Here’s a breakdown of the most consequential data points scheduled for release this week – and their potential market implications.

US: Inflation in focus

Consumer Price Index (CPI) – Wednesday, 11 June

The US CPI for May is the headline act this week. Economists expect a monthly rise of 0.2%, with core CPI, which excludes volatile food and energy prices, forecast to increase by 0.3%, pushing the year-on-year rate to 2.9% from 2.8%.

Why it matters:

This release is critical for the Federal Reserve’s decisions on future interest rates. A hotter-than-expected print could reignite fears of sticky inflation, prompting markets to price in fewer rate cuts in 2025. In this scenario, equities may react negatively, particularly interest-rate-sensitive sectors such as technology, while bond yields could rise on expectations of prolonged monetary tightening.

Producer Price Index (PPI) – Thursday, 12 June

The PPI, another key inflation gauge, will offer insight into pipeline price pressures. Any surprise here could reinforce or challenge the CPI narrative.

United Kingdom: Labour market and GDP

UK Labour Market Report – Tuesday, 10 June

This report includes wage growth and unemployment data for April. With the Bank of England (BoE) closely watching wage dynamics, any acceleration could complicate its plans to ease the monetary burden by cutting interest rates.

Why it matters:

Stronger wage growth may delay BoE rate cuts, pushing gilt yields higher and potentially dampening equity valuations, especially in domestic-facing sectors.

UK Spending Review – Wednesday, 11 June

The UK government’s 2025 Spending Review, set to be unveiled on Wednesday, 11 June, is expected to outline departmental budgets for 2026/27 to 2028/29, with capital investment plans stretching to 2029/30. In a marked shift, this review adopts a “zero-based” approach, meaning all spending will be reassessed from scratch rather than adjusted from existing baselines. This could lead to significant reallocations, particularly as the Treasury seeks to balance rising demands on public services with fiscal discipline. Key areas under scrutiny include health, education, and infrastructure, with the government also expected to publish accompanying strategies on industrial policy and long-term investment. The review will be closely watched for signs of political priorities and economic realism

Monthly GDP – Thursday, 12 June:

April GDP will offer a snapshot of the UK’s economic momentum after a mild recession earlier in the year.

Corporate news

In a thin week for earnings news, the highlights are set to be Zara-owner Inditex, which reports first-quarter results on Wednesday, and British grocery-market leader Tesco providing a trading update Thursday. There will also presumably be some guidance on UK consumer confidence and the current supermarket price war.

Key themes to watch:

• Inflation vs growth: Persistent inflation could delay rate cuts, while weak growth data may revive recession fears.
• Central bank divergence: The Federal Reserve, ECB, BoE, and Bank of Japan are at different stages of their policy cycles, creating opportunities and risks across FX and fixed income markets.
• Tariff effects: US inflation data may begin to reflect the impact of recent tariff hikes, adding a new layer of complexity to the inflation narrative.