Macroeconomics: The Day Ahead for 27 May 2026

Markets are effectively in a form of limbo, hoping for some form of interim deal between the US and Iran that would at least extend the current fragile ceasefire for another two months, but wary of the continuous ambiguity of occasional flashpoints of military activity, the suggestion that progress towards a deal is being made, but simultaneously confrontational statements about resuming the conflict. Today’s run of regular macro items is unlikely to have a lasting impact, with Australian CPI, Japan Services CPI and China Industrial Profits to digest, and only US regional Fed surveys and Brazilian inflation ahead, and a sprinkling of corporate earnings that include HP, Snowflake and the first batch of major Canadian banks.

Overnight comments from BoJ on mounting inflation pressures would appear to be another green light for a June rate hike, as do comments from BoJ’s Okuno from the BoJ’s monetary affairs dept underlining that financial conditions remain loose and corporate profits high. Australia’s CPI was mixed, with the unexpected headline dip offset by a slight rise in core CPI, which leaves well outside the RBA’s 2.0-3.0% target range, but for the time being, the RBA will likely be closely monitoring whether April’s fall in Employment was a one-off or signals a significant loosening in labour demand that would likely stay its hand on further rate hikes. A further drop in French Consumer Confidence to 82, leaves it a whisker away from its pandemic era low of 81. Unsurprisingly the union at Samsung Electronics voted to accept the most recent pay deal, but this serves as a reminder that booming AI related demand will not only drive up raw materials price, but also risks a wage price spiral. It should also be noted that if Asia’s chipmaking giants: Samsung, SK Hynix and TSMC are excluded from the MSCI Asia ex-Japan equity index, then the index has been sliding to test recent lows – details are always important. Last but not least to the UK, where Ofgem has raised the household energy price cap by 13% for the July-September quarter, which will drive CPI sharply higher. But as previously noted, there is nothing that the BoE can do to counter the effects of administered prices, and the government is obviously not in a fiscal position, where it would be able to less the impact.