Surfin USA: World market themes for the week ahead

Central banks in Australia, Britain and Sweden will meet next week, as markets assess how much leeway the U.S. Federal Reserve has to cut rates this year.

Traders are on alert for Japanese currency intervention, while weighing up the effects of U.S. market turbulence. And the around-the-world election tour makes a pit-stop in Panama.

Here’s what is in store for global markets in the week ahead:

DISTURBING GOLDILOCKS

U.S. consumers are in focus as the University of Michigan’s preliminary reading on consumer sentiment in May gives a snapshot of their inflation expectations and economic outlook.

Months of stubborn inflation have threatened to disrupt the so-called Goldilocks narrative of resilient growth and cooling consumer prices that have helped drive stocks higher.

Any signs in the May 10 report that higher prices are weighing on sentiment could encourage the Fed to keep rates elevated, adding to recent pressure on stocks and bonds.

The Fed on Wednesday acknowledged a recent lack of progress on inflation, although Chair Jerome Powell reiterated that rates are likely to fall in 2024. Economists polled by Reuters expect the consumer sentiment index to rise to 77.9 from 77.2 in April.

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