Upbeat music plays.
[Screen shows "Weekly Market Outlook with Jeffrey Kleintop"]
[Jeff holds up an illustration of a judge's gavel]
From tariff talks and tax bills to a rate cut from the European Central Bank and the monthly U.S. jobs report, I'm Jeff Kleintop with 90 seconds on what you need to know about the week ahead.
On Monday, the U.S. Senate returns from break with Republicans trying to work out a Senate version of the House-passed tax and spending package. That comes after a trade court last week blocked the Trump administration's use of the International Emergency Economic Powers Act for tariffs, but a stay was granted as it goes through the appeals process that keeps tariffs in place while the legal battle continues. If the Trump administration loses the appeals, it still has other means to increase tariffs. But there may be less urgency for countries to cut trade deals now. The U.S. Treasury Secretary has said talks with China have stalled.
Now on Tuesday, we get China's manufacturing PMI
[Jeff holds up an illustration of a factory with smokestacks]
which is expected to show a recovery in activity due to temporary tariff reductions and resumed U.S. orders. Data show a pickup in US-bound shipments in the first half of May after April's abrupt slump.
And on Wednesday, we get the Bank of Canada's decision
[Jeff holds up an illustration of the Canadian flag]
on interest rates. The central bank paused its series of rate cuts in April. In the past eight cycles over the last 25 years, when the BOC has paused it typically stayed on the sidelines for multiple meetings. Given the heightened uncertainty around U.S. tariffs it seems likely the central bank will remain on pause this week.
However, on Thursday, the European Central Bank
[Jeff holds up an illustration of scissors cutting a percentage sign labelled "Rates"]
is likely to cut rates by 25 basis points for the eighth consecutive meeting, bringing the rate to 2%. Now 2% is the inflation target, its where most of the forward inflation forecasts are, the middle point of the neutral rate estimate, and the market's long-term inflation forecast reflected in the five-year forward inflation swap, but it doesn't mean the ECB stops cutting here. We expect one more rate cut this year.
Now on Friday, U.S. jobs report for May
[Jeff holds up an illustration of a clipboard and pen, labelled "Job Application"]
is expected by economists to show a gain of 130,000 jobs, which would be below April's total. One reason for the softer reading is leisure and hospitality as subpar international tourism and a pullback in government travel led to the slump in demand.
[Jeff holds up sign saying "Thank You"]
Thanks for watching.
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