Week Ahead: NFP and central bank meetings top the bill
Updated Updated Sun, 2025 June 1 11:41
It’s a busy risk event calendar with the first Friday of the month always bringing with it the US monthly employment figures in the form of the non-farm payrolls data. Two major central bank meetings also feature, with the ECB and BoC both potentially cutting rates again, though the latter is more likely to sit on their hands. Looming over markets will also be ongoing trade war headlines and the Trump administration’s efforts to plot a new course for tariffs and negotiations after the setbacks against its plans last week.
Very few people have any idea what happens next in the tariff drama. Does it offer a way out for Trump to de-escalate and limit the economic fallout that many economists are predicting? Or does it force the administration to double down and increase levies further as its trade adversaries like the EU and China go hard in talks believing the US can’t sustain tariffs for much longer? It’s likely that not much changes as alternative methods are used, say for example with sectoral tariffs. More detail on this will be key, though Treasury Secretary Bessent recently noted that US-China talks have stalled and the US has accused China of cheating on its agreement.
Amid all this trade uncertainty, there’s been no stopping stocks in recent weeks. The S&P 500 enjoyed it best month since November in May, though the rally has stalled more recently. The Mag 7 have led the markets once again, and solid earnings from most likely mean bullish momentum can kick on if the benchmark index stays above the 200-day simple moving average at 5,785. The dollar isn’t faring so well with its fourth straight month of selling and bears eyeing up the recent lows just below 98 on the Dollar Index.
In Brief: major data releases of the week
Monday, 2 June 2025
– US ISM Manufacturing: May ISM manufacturing is seen rising modestly to 49.2 from 48.7. The easing of trade tensions with China with tariffs being cut to 30% should help sentiment. Manufacturing inventories have risen to record levels due to front-loading.
Tuesday, 3 June 2025
– Eurozone CPI: Consensus sees the headline two-tenths lower at 2.0% due to lower energy prices. The core is also forecast to print two-tenths lower at 2.5%. The ECB may be worried about the disinflationary impact of tariffs, though progress to an agreement is so far relatively slow.
Wednesday, 04 June 2025
– Australia GDP: Economists expects Q1 economic growth to slow to 0.4% from the prior 0.6%. Front-loading of orders ahead of Liberation Day likely offset softer domestic demand from natural disasters.
– Bank of Canada Meeting: There is just over a one in five chance of a 25bps rate cut, which likely means the BoC will leave rates unchanged at 2.75%. Tariffs remain the chief headwind for the economy. Unemployment is rising but core inflation is moving higher again.
– US ISM Services: May ISM services is forecast to increase to 52.0 from 51.6. Regional surveys point to downside risks to services activity. Tariffs have caused supply chains to intensify and prices to surge, though the US-China détente may help.
Thursday, 05 June 2025
– ECB Meeting: A 25bps rate cut is fully priced in, with around 58bps of ECB easing currently for this year. Staff projections may show inflation falling below 2% this year. A wait-and-see stance is likely, with trade uncertainty still high amid a split in views on the Governing Council.
Friday, 06 June 2025
– US Non-Farm Payrolls: Consensus sees 130k jobs added, down from the prior 177k, though there were 58k of negative revisions. The three-month average is 155k. The unemployment rate is predicted to remain at 4.2%. Wage growth is seen steady at 0.3% m/m. Key will be if the Liberation Day shock fed through into weaker hiring and whether the DOGE spending cuts are impacting on federal employment yet.
– Canada Jobs: The jobless rate may rise above 7%, after the highest print since November was seen in April. Employment gains were flat with net additions of 7,400.
