Monday Market Must-Knows: June 12, 2023

What happens when inflation decreases?

Inflation is an important factor to watch. The US Consumer Price Index (CPI) and Producer Price Index (PPI) will be released this week. Expectations are for a decrease in both indices, which would be positive for those concerned about inflation. Lower inflation could alleviate pressure and potentially allow for increased government spending to stimulate the economy.

Last week, there were surprising interest rate hikes by Australia and Canada. This week, the focus is on the United States, with the Federal Reserve's decision on interest rates. Expectations are that rates will remain unchanged at 5.25%, but there is speculation about a possible increase of 25 basis points. 

The press conference with Jerome Powell following the decision will be significant. Additionally, the Bank of Japan is expected to make an announcement regarding its interest rates, which have been at a negative 0.1%. There is anticipation that Japan may move towards a zero interest rate policy. 

The European Central Bank is also set to release its interest rate announcement, with expectations that rates will remain at 3.75%. These announcements are likely to create market volatility.

Lastly, retail sales data will be released in the US, indicating the performance of consumer spending. Expectations are for a negative 0.1% reading, which could impact economic growth and retail stocks. The accompanying report will provide insights into specific sectors affected by retail sales, presenting potential investment opportunities.

Overall, these announcements and economic indicators will shape market trends and guide investment decisions.

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