Today’s agenda features the release of the US Durable Goods Orders, while the UK CPI report took centre stage earlier. The report fell short of expectations, with services inflation remaining around 5%, which is a focus for the Bank of England.
The US Durable Goods Orders data is known for its volatility and typically does not move markets decisively.
Central Bank Announcements
Additionally, speeches from various Federal Reserve officials and the Bank of Canada’s Meeting Minutes will be released later in the day.
Scheduled speakers include ECB’s Villeroy at 10:00 GMT, Fed’s Kashkari at 14:00 GMT, and Fed’s Musalem at 17:10 GMT.
The UK inflation report came in weaker than anticipated, with services prices holding firm at around five percent. This is particularly relevant because it is an area the Bank of England watches closely when assessing price pressures in the economy. A higher services inflation rate can signal persistent cost increases, which could delay any thoughts of reducing borrowing costs.
The market has been pricing BoE rate cuts for later in the year, but today’s reading could lead to some adjustments. Traders may need to reconsider how aggressively they expect policy to loosen in the coming months. If inflation remains sticky in services, central bank policymakers could opt for a cautious approach before any moves are made.
Meanwhile, the upcoming US Durable Goods Orders release is known to be volatile and does not consistently influence trading sentiment. Large swings in aircraft orders can distort the headline figure, making it less useful as a standalone indicator for economic momentum. That said, any broad weakness in core readings could be another data point suggesting slower business investment.
Market Expectations
Beyond economic reports, scheduled remarks from central bank figures may provide some clarity on policy direction. The European Central Bank’s Villeroy speaks in the morning, and while his past comments have leaned towards patience, markets will gauge whether his stance has shifted.
Later in the session, comments from Federal Reserve officials will be in focus. Kashkari has previously signalled a preference for maintaining a restrictive policy stance until more evidence of disinflation emerges. His latest remarks will show whether he remains convinced that rate cuts should be delayed. Meanwhile, Musalem’s speech could offer insight into how Fed policymakers are interpreting recent data.
The Bank of Canada’s Meeting Minutes will also be released today, giving further perspective on policymakers’ reasoning behind their latest decision. With expectations growing for cuts this year, any discussion on inflation risks and labour market conditions will be carefully reviewed.
In the short term, adjustments in rate expectations could create movement in fixed-income markets, particularly in the UK and US. Inflation data and central bank rhetoric will continue shaping expectations, and any deviation from established views may lead to reassessments.
