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    Home»Bonds»Week Ahead for FX, Bonds: U.S. Inflation, PMI Data in Focus as Shutdown Continues
    Bonds

    Week Ahead for FX, Bonds: U.S. Inflation, PMI Data in Focus as Shutdown Continues

    October 17, 2025


    By Dow Jones Newswires staff

    Below are the most important global events likely to affect FX and bond markets in the week starting Oct. 20.

    Delayed U.S. inflation data are due to be released during the week and will attract attention from investors seeking evidence on the likelihood of future interest-rate cuts.

    As long as the U.S. government shutdown continues, however, major U.S. data will be delayed, leaving greater focus than usual on provisional purchasing managers' surveys for October for a gauge of how well the U.S. economy is performing.

    In Europe, focus will center on purchasing managers' surveys and U.K. inflation data. In Asia, political developments in Japan and a key economic meeting in China could set the tone for market sentiment in the weeks ahead.

    U.S.

    A continued U.S. government shutdown would mean economic data continue to be delayed, complicating the outlook for U.S. interest-rate cuts. However, the Bureau for Labor Statistics is calling back some employees to produce inflation data for September, which is expected to be released on Friday, Oct. 24.

    Amid a lack of other major data releases--with key jobs data for September still not published--these inflation figures will likely grab keen attention, economists at HSBC said in a note.

    "We continue to expect the impact of the higher tariffs to keep building in the coming months, particularly in import-intensive sectors, but it will be interesting to see if the areas that have already seen spikes in prices--such as audio equipment and bananas--see further price pressures," they said.

    Also on Friday, flash purchasing managers' data on U.S. manufacturing and services activity in October will be closely watched, particularly for any clues on labor-market health and for any indications on the impact of the shutdown on consumer sentiment.

    Investors anticipate that a weak labor market will lead the Federal Reserve to cut interest rates by 25 basis points in both October and December, with further reductions to come in 2026.

    Fed governor Christopher Waller said recently that he supported continued policy easing, echoing comments from Fed Chair Jerome Powell. The Fed's next policy decision is on Oct. 29.

    Other data include the University of Michigan's final consumer sentiment index for October, due to be released on Friday. Weekly jobless claims and September existing home sales figures on Thursday, followed by September new home sales figures on Friday will likely be delayed if the shutdown continues.

    The Treasury will sell $13 billion in 20-year bonds on Wednesday and $26 billion in five-year inflation-protected TIPS on Thursday.

    Canada

    Canadian inflation data for September are due to be released Tuesday and will be closely watched as investors gauge the likelihood that the Bank of Canada will cut interest rates again at its next meeting on Oct. 29.

    If the inflation data suggest underlying inflation is slowing even closer to 2%, this may be enough for the BOC to cut rates again, despite September employment being stronger than expected, Citi economists said in a note.

    "The unemployment rate is still at cycle highs, suggesting a widening output gap. September CPI this month may be more important for October [rate] cut chances than jobs," they said.

    Canadian money markets currently price in a 64% chance that the BOC will reduce interest rates by 25 basis points to 2.25% later this month, LSEG data show.

    Canadian retail sales data for August are due on Thursday.

    Eurozone

    Flash October purchasing managers' surveys on manufacturing and services activity will be the highlight in a week light on European data, alongside the EU Summit on Thursday and Friday.

    Flash PMI data for October from France, Germany and the eurozone are scheduled for Thursday, alongside France's monthly business survey and the eurozone's flash consumer confidence indicator, both for October.

    "With regard to October we suspect that the latest political developments in France will continue to weigh domestically, but that there remains underlying momentum in euro area activity more broadly and therefore forecast a rise in the [eurozone PMI] composite index to 51.5," said Investec analyst Ryan Djajasaputra in a note.

    German producer price data for September are scheduled for Monday.

    Bond auctions will include Germany selling October 2027-dated green Bobls and February 2035-dated green Bunds on Tuesday, as well as November 2032-dated Bunds on Wednesday.

    Bond issuance is also scheduled from Slovakia on Monday and Finland on Tuesday.

    U.K.

    The coming week will be a busy one for U.K. economic data as investors watch for any signs that interest rates could be cut again this year. At the same time, they will scrutinize any signals on possible tax increases or spending cuts at the upcoming Nov. 26 budget.

    Focus will center on Wednesday's consumer-price inflation data for September. Inflation is expected to remain elevated and to pick up even further, potentially taking annual CPI to 4.0%. However, the Bank of England has flagged that it expects September will mark the peak for inflation.

    High inflation means most investors anticipate that interest rates won't fall again until next year and will be kept on hold at the BOE's next meetings in November and December. Recent weak U.K. jobs data, however, caused the prospect of a reduction in December to creep up. U.K. money markets now price in a 49% chance of a December rate cut, LSEG data show.

    Signs of a weak economy could increase December rate-cut chances even further. In that light, investors will pay close attention to Friday's flash purchasing managers' data on manufacturing and services activity in October, as well as retail sales data for September on the same day.

    "The anticipation of a greater tax burden might already be prompting households to be more cautious about some discretionary spending," Investec economist Sandra Horsfield said in a note.

    U.K. public finance data for September are released on Tuesday and are expected to show increased borrowing, potentially increasing concerns about the U.K.'s tricky fiscal outlook ahead of next month's budget.

    Producer-price data for September are due to be released on Wednesday, having been suspended since March due to problems with methodology reported by the Office for National Statistics.

    Other data due during the week include the GfK consumer confidence survey for October, due on Friday.

    The U.K. plans to sell July 2053 green gilts on Tuesday and March 2031 gilts on Thursday.

    Scandinavia

    Denmark and Sweden will hold bond auctions on Wednesday.

    Hungary

    The Hungarian central bank announces a rate decision on Monday.

    Market pricing shows about an 85% chance that interest rates will be left unchanged at 6.5%, and a 15% chance of another rate cut, LSEG data show.

    "Contrary to the government's recently expressed view in favor of policy easing, "we do not see any room for a cut in the base rate yet," ING analysts said in a note.

    Rate cuts are unlikely this year as the central bank remains focused on addressing high inflation expectations, they said.

    Turkey

    Turkey's central bank is expected to cut interest rates further at its meeting on Thursday.

    The latest inflation data showed inflation rose to 33.3% in September but this was largely driven by higher food prices with core inflation easing further, Capital Economics economist Jason Tuvey said in a note.

    "The further easing of underlying price pressures will give officials enough confidence that they can press ahead with additional 250 basis points rate cuts at its forthcoming meetings that takes the one-week repo rate down from 40.50% now to 35.50% by year-end," he said.

    Capital Economics expects further easing next year with rates reaching 25.00% by end-2026.

    Japan

    An extraordinary Diet session is expected to be convened to select Japan's new prime minister. It remains uncertain whether Sanae Takaichi, leader of the ruling Liberal Democratic Party, will secure enough votes, given the party's minority status and ongoing coalition talks.

    Investors will focus on central bank speeches, with BOJ policy board member Hajime Takata slated to deliver a speech in Hiroshima on Monday, and Deputy Gov. Ryozo Himino to speak at an event on Tuesday. The BOJ will release its semiannual financial system report on Thursday, assessing the health of the banking sector and financial markets.

    Data due Friday are expected to show that inflation remains stubborn. Consumer prices excluding fresh food likely rose 2.9% in September from a year earlier, according to a Quick poll, and compared with the 2.7% rise in August. Trade figures for September are scheduled for release on Wednesday.

    The BOJ will conduct outright purchases of government bonds on Wednesday, covering maturities from over three years up to 25 years, to help stabilize the domestic bond market.

    The ministry of finance will auction about 300 billion yen of 10-year climate transition JGBs on Tuesday. These bonds may attract investors interested in Japan's decarbonization push, as transition securities gain traction as a financing tool for green initiatives.

    China

    China faces a packed data calendar, with third-quarter GDP figures taking center stage as markets assess how the economy has fared under renewed tariff pressure.

    The week begins with September house price, property investment and sales data, which are expected to underscore the sector's prolonged slump. A Wall Street Journal poll suggests the economy likely grew 4.8% in the third quarter from a year earlier, down from 5.2% the previous quarter, as domestic demand stayed soft.

    (MORE TO FOLLOW) Dow Jones Newswires

    October 17, 2025 10:49 ET (14:49 GMT)

    Copyright (c) 2025 Dow Jones & Company, Inc.



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