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By Noreen Burke
Investing.com -- The European Central Bank will hold its annual retreat in Portugal, where President Christine Lagarde, along with Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey will appear at a panel discussion on Wednesday. The first half of what has been an exceptionally turbulent year in markets is ending, with investors wondering whether the next six months could bring some respite or more volatility. The economic calendar features the PCE price index - an inflation gauge watched by the Fed - along with the latest inflation data out of the Eurozone and Chinese PMIs. Here’s what you need to know to start your week.
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Sintra forum
The ECB’s three-day forum in Portugal's Sintra gets underway on Monday against a backdrop of worries over whether central bank moves to stamp out the strongest inflation surge in decades could tip the global economy into a recession.
The forum will be focusing on “challenges for monetary policy in a rapidly changing world.”
Investors will be closely watching Wednesday’s panel discussion with Lagarde, Powell and Bailey for insights on how the central bank heads view the trade-off between curbing inflation while still trying to ensure a soft-landing for the global economy.
Comments by ECB officials will also be closely watched for any more details on a planned anti-fragmentation tool.
Torrid first half draws to a close
Six months characterized by the fastest rate-hiking cycle in decades, market turmoil and a war that spurred spiraling inflation are drawing to a close, leaving investors to ponder what the second half may bring.
The S&P 500 is down around 18% year-to-date, and bonds have fared little better: The U.S. bond market, as measured by the Vanguard Total Bond Market Index Fund (NASDAQ:BND), is down 10.8% for the year to date.
With investor expectations fluctuating between continued high inflation and an economic downturn caused by a hawkish Fed, few believe the market's volatility will subside anytime soon.
"Inflation is still rising and that means the Fed will hike more and move more rapidly, which will put downward pressure on the economy, so that's adding to recession fears," Seema Shah, chief strategist at Principal Global Investors told Reuters.
"There are also growing signs of economic weakness coming earlier than expected."
U.S. economic data
The U.S. is to release a raft of economic data in the coming week which will show how the economy is faring amid the Fed’s aggressive rate hiking cycle.
Investors will be closely watching Thursday’s May data on the personal consumption expenditures price index for indications on whether inflation is cooling.