Week ahead: Lots of data and inflation insights

The upcoming week starts off quietly but holds a few gems for those paying attention. Kicking things off, the Bank of Japan will release its summary of opinions, offering insights into its monetary policy stance amid concerns over inflation and a weak yen.

As the week progresses, we’ll see FedEx and Nike unveiling their earnings, providing a snapshot of corporate health amid economic turbulence. Consumer confidence reports and inflation data from Australia will also be key focal points, potentially setting the stage for central bank manoeuveres.

By week's end, the US Core PCE will round things out, offering clues on the Fed's next steps. Buckle up; even a slow week can offer plenty of action for the market-savvy.

Here are the week’s key events:

Monday, June 24th: BOJ Summary of Opinions

It’s a very slow start to the week for markets with some few minor things to take note of. For those interested in the Yen the Bank of Japan’s summary of opinions will offer a broad strokes picture on what to expect next from the central bank.

Last month’s key takeaways included the continuation of easy monetary conditions, the potential for gradual rate hikes, and concerns over household purchasing power and inflation risks from a weak yen and rising crude oil prices.

Discussions also touched on reducing bond buying and the eventual elimination of ETF holdings. Will we see any indications of a surprise move from the BoJ this month?

Tuesday, June 25th: CB Consumer Confidence, FedEx

FedEx is set to release its quarterly earnings report on Tuesday after the market closes.

Analysts anticipate earnings of $5.33 per share for the quarter. The company's FY24 guidance is projected between $17.25-18.25 EPS.

Key areas of focus for investors will include FedEx's strategies for managing operational costs and sustaining volume growth in the face of ongoing global economic challenges.

Additionally, insights into the impact of recent macroeconomic trends on shipping demand and the effectiveness of cost-cutting measures will be crucial for assessing FedEx's future performance. Can it deliver the goods?

We will also get the US Consumer Confidence report Tuesday.

Consumer sentiment in the US saw improvement in May, as the Conference Board's Consumer Confidence Index rose to 102.00 from April's 97.5.

The Expectations Index also increased, reaching 74.6 from 68.8. Despite a slightly less positive assessment of current business conditions, the strong labor market bolstered overall consumer confidence, with fewer respondents indicating difficulty in finding jobs.

Wednesday, June 26th: AUD CPI, Micron Technology

The upcoming CPI data will be pivotal for the Reserve Bank of Australia (RBA) as it navigates inflation risks. Currently, inflation sits at 3.6%, well above the RBA's 2-3% target range.

The June quarter inflation figures, set for release on July 31, will be closely monitored as they precede the RBA's critical August meeting. Should inflation exceed expectations, it may increase the likelihood of a rate hike, despite the RBA maintaining rates at 4.35% for five consecutive meetings.

Market participants are particularly attentive, as any significant uptick in inflation could shift expectations toward tighter monetary policy sooner than anticipated.

Additionally, Micron Technology (MU) is set to report its fiscal third-quarter results, with analysts adjusting their price targets in anticipation. The company's focus on AI, particularly through its high-bandwidth memory deal with Nvidia, is expected to drive growth.

Micron's CEO, Sanjay Mehrotra, highlighted a return to profitability and positive market conditions. Analysts are optimistic, with Bank of America raising its price target to $170, citing strong AI-server demand and increasing DRAM requirements.

Other firms, including Cantor Fitzgerald and Susquehanna, have similarly adjusted their targets upwards, reflecting confidence in Micron's pricing trends and market positioning.

Thursday, June 27th: Unemployment, Nike Earnings

Thursday we have the release of the weekly initial unemployment claims report from the Department of Labor. Continuing claims are expected to reach 1,825,000, slightly up from last week's 1,820,000.

Despite the recent spike in jobless claims, some economists attribute it to seasonal volatility and temporary factors. However, other indicators suggest businesses may be reducing labor costs, posing risks to employment growth.

Morgan Stanley's Ellen Zentner notes that although payroll growth was strong in May, the increase in jobless claims resembles last year's pattern of rising claims in early summer followed by slower payroll growth. Continued increases in jobless claims could lead the Fed to reassess its rate cut timetable.

Also, Nike will release its fourth-quarter earnings on Thursday after the market closes. Analysts expect $0.86 EPS on $12.91 billion in revenue.

The fiscal 2025 guidance will be the primary focus, with Bank of America predicting a lower-than-expected EPS of $3.82 but noting sufficient margin levers and innovation potential. Nike's 1H25 sales are expected to decline due to macro challenges, particularly in China and Europe, but a 2H25 turnaround is anticipated.

Despite these headwinds, BofA maintains a ‘Buy’ rating with a $113 price target. Nike shares closed at $95 on Tuesday.

Friday, June 28th: US Core PCE

Finally, the upcoming core Producer Price Index (PPI) release Friday is highly anticipated, especially after the previous PPI report fell short, prompting expectations for two rate cuts by year-end.

Preliminary forecasts suggest the Core PCE may increase by 0.13% month-over-month, with a year-over-year figure of 2.6%, down from the previous 2.8%. This indicates cooling inflation, aligning with a dovish Fed stance, as it falls below the Fed's 2.8% projection for 2024.

Recent labour market data adds complexity, with initial jobless claims spiking to their highest since August 2023. However, George Pearkes of Bespoke Investment Group suggests this may be an anomaly rather than a trend, as such spikes often get revised.

The upcoming PPI data will provide clarity on producer-level inflation and influence economic outlooks. A higher PPI could reignite inflation concerns, while a lower figure would support the current sentiment towards easing.