Summary
In the upcoming week, the Bank of England is expected to keep its interest rates unchanged at 5.25%, aiming to address high services inflation and avoid involvement in the election campaign. Similarly, Indonesia and Brazil are likely to maintain their rates at 6.25% and 10.5%, respectively. Manufacturing PMIs for June show slight improvements in Europe, though France, Germany, and the Euro area remain in contraction. The UK and US indexes are marginally expansionary, while India's index is expected to decline slightly but remain strong. In contrast, Euro area construction output is growing, with Italy's sector up by 4.5% in April. The US Conference Board’s leading index is expected to decline, and the UK's Confederation of British Industries trends orders have improved to -21. Japan's trade balance is projected to turn deeply negative, and Indonesia's balance is expected to drop to $1 billion. Argentina's trade balance is improving due to reduced imports, while China's foreign direct investment has fallen over 28% year-on-year amid geopolitical tensions.
The IEA’s June oil market report highlights a demand growth reduction below 1 mb/d, driven by weak OECD deliveries, while non-OECD demand is expected to rise. OPEC+'s decision to reverse production cuts remains uncertain, leading to a tighter market balance despite lower demand growth. The EIA forecasts a draw in stocks and a modest Brent price rise to $88/bbl in early 2025.
The US Federal Reserve has kept rates unchanged at 5.25%, continuing a higher-for-longer approach to achieve a 2% inflation target. The World Bank's Global Economic Prospects report predicts a 2.6% global growth rate, increasing slightly to 2.7% by 2025-26, with developing economies growing by 4% and advanced economies by 1.5% in 2024. Geopolitical tensions and trade uncertainties pose significant risks to global trade growth.
