- SAT: OPEC MEETING
- MON: German Industrial Output (May), Swedish CPIF Flash (Jun), EZ Sentix (Jul), Retail Sales (May), US Employment Trends (Jun)
- TUE: RBA & RBNZ Policy Announcements, EIA STEO; German Trade
Balance (May), US NFIB (Jun) - WED: “Liberation Day” Tariffs take effect (end of 90-day suspension), EU-US Tariff Negotiation Deadline (50% duty on all EU imports), FOMC Minutes (Jun); Chinese CPI (Jun), PPI (Jun), US Wholesale Sales (May)
- THU: BoK Policy Announcement; Norwegian CPI (Jun), US Weekly Jobless Claims, Chinese M2 & New Yuan Loans (Jun)
- FRI: IEA OMR; UK GDP (May), Canadian Unemployment/Wages (Jun)
FOMC MINUTES (WED): At its , the FOMC kept rates at 4.25-4.50%, as expected, with its 2025 median rate projection left unchanged at 3.9%, signalling 50bps of cuts this year. The 2026 and 2027 dots rose to 3.6% and 3.4% (from 3.4% and 3.1%). Seven members now expect no cuts this year (up from four), two see 25bps of cuts (down from four), eight foresee 50bps (down from nine), and two expect 75bps (unchanged). forecasts were lowered to 1.4% for 2025 (prev. 1.7%) and 1.6% for 2026 (prev. 1.8%), while unemployment forecasts rose, except for the long run.
Headline and core PCE inflation forecasts increased, with 2025-end headline inflation at 3.0% (prev. 2.7%) and 2.4% for 2026 (prev. 2.2%). The Committee said uncertainty has “diminished further but remains elevated,” removing prior warnings about stagflation risks, though higher and lower growth keep those risks present.
At his post-meeting press conference, Fed Chair Powell largely repeated familiar remarks, saying a patient, wait-and-see approach remains appropriate. He emphasised that projections are uncertain and not a fixed plan, recommending a focus on near-term forecasts.
Powell said the time will come for more confidence, but cannot specify when. Given the current labour market and falling inflation, holding rates was the right course, he said, and he expects to learn more over the summer and make better decisions after a “couple of months.”
Powell noted favourable inflation over the past three months but warned of upcoming tariff impacts and higher consumer costs, underscoring the need for patience. He said rates must stay high to bring inflation down fully and described policy as “modestly restrictive,” similar to his May comments that policy is “modestly or moderately restrictive.”
Since then, speakers have generally toed that line; however, the influential Fed Governors Waller and Bowman both suggested that July may be the time to consider adjusting the policy rate, if inflation pressures remain contained. May’s core PCE data rose slightly above expectations, but still indicated muted inflation (the monthly rate printed +0.2% M/M vs an expected +0.1%), and while the real consumer spending fell by 0.3% (steepest decline this year), suggesting weakening demand, analysts said the data supports the view that the Fed can remain patient, with limited pressure to tighten policy further amid subdued price pressures.
Additionally, stronger-than-expected jobs data for June saw markets scale back their expectations of Fed rate cuts ahead, reinforcing expectations of a prolonged hold. At the time of writing, money markets have virtually priced out any prospects of a July rate reduction, and through to the end of the year, pared pricing back to a little over two rate cuts, aligning with the Fed’s view.
US LIBERATION DAY DEADLINE (WED): The 90-day tariff pause on US imports, authorised as part of US President Trump’s “Liberation Day” policy, expires Wednesday, with no extension signalled. US President Trump said they will start sending letters regarding tariffs, and 10 to 12 countries will get a letter on Friday, 4th July, with tariffs to range from 10%-20% and 60%-70%, while countries are to start paying the new tariff on August 1st.
Meanwhile, US Treasury Secretary Bessent said to expect a flurry of trade deals before July 9th and expect to see about 100 countries get a minimum 10% reciprocal tariff, while he added they are going to be announcing several deals. Analysts at CapEco suggest, “Given the limited progress in concluding trade negotiations since Liberation Day, there is a risk that huge tariffs will be imposed on 9th July after the 90-day pause expires.
We suspect that further last-minute concessions will be made to permit extensions for most countries, but a few of the “worst offenders” may be singled out for punitive treatment. Markets seem to be positioned for a fairly benign outcome, implying a risk of some near-term turbulence if that fails to materialise.”
EU-US TARIFF NEGOTIATION DEADLINE (TUE): US President Trump set a July 8th deadline for a provisional EU-US trade deal or a 50% reciprocal tariff for the bloc. Talks, led by EU Trade Commissioner Sefcovic and USTR Greer, focus on securing a 10% baseline tariff in exchange for immediate relief for key EU exports, including autos, steel, and semiconductors. Brussels is pushing for a UK-style carve-out offering upfront exemptions, which EU diplomats cited by Politico say is essential to secure member state backing.
Politico adds that the Commission is also pressing for sector-specific reductions, particularly in pharmaceuticals and aerospace, though officials see limited scope for movement from Washington. Sefcovic is expected to offer conditional acceptance of the 10% tariff in return for near-term concessions, but several details are likely to be ironed out after the deadline.
The EU is said to be weighing four possible outcomes in its tariff talks with the US, according to Politico, citing two diplomats. The worst-case scenario is a total breakdown, triggering a jump in tariffs to 50% and new levies on sectors like pharma and semiconductors. A more moderate outcome would see talks continue over the summer with current tariffs in place.
The best case is a broader framework deal including cooperation with China, though this would likely involve accepting some US-favoured terms. A near-term “agreement in principle” could delay EU retaliation — currently paused until July 14th — into the medium term. Diplomats view a full breakdown as unlikely, with negotiations expected to carry on past the July 8th deadline if needed.
Within the EU, Berlin and Rome support a swift deal even if it requires concessions, while countries like Spain have faced pressure from Trump over defence spending and may be more cautious.
OPEC MEETING (SAT): OPEC+ is to hold its confab on Saturday, 5th July, with delegates expected to approve a further 411k bpd output hike for August, in line with the pace of increases agreed for May, June, and July. Desks suggest recent months have seen the group pivot from price defence to a market share strategy, led by Saudi Arabia, Kuwait, and UAE, which sharply boosted exports in June amid regional security risks.
In terms of compliance, while some members, notably Kazakhstan, remain above quota, Bloomberg data suggests most are producing broadly in line with targets, after prior overproduction was offset by voluntary restraint. Analysts note a further hike would add to oversupply risk into H2, with OPEC+ now focused on recouping share from US shale, which posted record output in April. Market attention will be on both the final size of the hike and any signals around quota enforcement or future policy direction.
UK GDP (FRI): Expectations are for M/M growth in May to pick up to 0.1% from the 0.3% contraction seen in April. As a reminder, the prior release saw a larger-than-expected contraction in growth on account of payback from the solid showing in Q1, which was boosted by the front-running of exports ahead of US tariffs. Pantheon Macro holds a consensus view and expects growth to be underpinned by “a rebound in legal and real estate activity”, boosting services output.
That being said, the consultancy concedes that its projection for 0.2% Q/Q growth looks “increasingly ambitious”, given that GDP would need to rise by 0.3% M/M in June. Holding a more pessimistic view for this month’s report is Investec, which expects growth to contract by 0.2% M/M. The desk notes that retail sales metrics and car production data point to contractions in the services and manufacturing sectors.
Looking beyond the upcoming releases, Investec (LON:) notes that it expects the can to be kicked down the road when it comes to global tariffs, and the current 10% baseline tariff remains in place. Under such a scenario, it expects “economic momentum to pick up in H2, helped by further rate cuts”.
However, there are clearly huge risks around this call. From a policy perspective, a soft outturn could heighten expectations for an August cut. However, greater concern by the MPC is currently being placed on the softening labour market and elevated inflation.
CANADIAN JOBS REPORT (FRI): With the BoC on pause and avoiding forward guidance, the central bank is taking it meeting-by-meeting due to economic uncertainty. The upcoming jobs report will help shape expectations for BoC easing. Money markets are only pricing in one further rate cut by the end of the year. However, a particularly weak report may start to see two rate cuts priced in with more certainty.
The BoC highlighted that the labour market has weakened, particularly in trade-intensive sectors, with unemployment rising to 6.9%. It also warns that the economy is expected to be considerably weaker in Q2. BoC Governor Macklem noted that what happens to the labour market next will depend critically on what happens with the Canada-US trade relationship.
It will also depend on how much Canada can expand trade within our country and overseas. Macklem also warned that export-oriented businesses quickly cut their hiring plans significantly in response to US tariffs. And with a lag, other businesses have scaled back their hiring intentions. “If these cutbacks materialize, we can expect overall employment to weaken further. We are watching closely for signs that weakness in the job market is broadening.”
This article originally appeared on Newsquawk.