The Week Ahead - 23 - 27 June 2025

United States – Our nowcasts for Friday's PCE release suggests high 0.1% m/m readings for headline and core PCE inflation, with the y/y rates rising to 2.2 and 2.6% due to base effects. Like the CPI reading earlier this month, increases in goods inflation are largely offset by mild services inflation readings. We expect strong personal income gains on the back of growth in wages, but consumption to grow less with higher saving rates. On Thursday we get the third estimate of Q1 GDP, with no reason to expect a major revision.

Eurozone – Eurozone preliminary PMI’s for June are released next Monday next to PMIs for Germany and France. In the final month of the second quarter the composite PMI is expected to remain close to neutral reflecting a further slowing of economic activity as the impact of trade tariffs start to bite. Underlying we expect a further stabilization in manufacturing, in part driven by expectations of higher future demand from higher government spending on infrastructure and defence, while the services sector extends the slowing trend we observed in the past months.

Germany – On Tuesday the German cabinet is deciding on the 2025 budget draft, along with key figures for 2026, and on the infrastructure fund. By reforming the debt-brake the German government has paved the way for large public investments, for instance in the area of infrastructure, but concrete proposals on the actual spending have so far lacked. In the following weeks details emerging on the budget are expected to provide more clarity on the type of expenditure as well as on the speed that fiscal spending is ramped up in the remainder of 2025 and 2026.

The Netherlands – The second calculation of Dutch GDP is released on Tuesday. Next to possible revisions to the Q1 figure of 0.1% q/q, which was heavily influenced by stock developments, we also get additional information for instance on government finances as well as the household savings rate.

Global – The NATO summit takes place on Tuesday & Wednesday in The Hague. NATO countries are widely expected to adopt a new defence spending target of 5% of GDP, up from 2% at present. This comprises 3.5% in ‘core’ defence spending and 1.5% of defence-related infrastructure expenditure. At least one country (Spain) is expressing opposition to this new target. Aside from the target itself, key to watch will be whether there are any concrete commitments to specific defence projects and whether there are any near-term targets for raising defence spending. The announcement will shed light on how quickly European countries raise defence spending and the impact it will have on the economy and on bond markets over the coming years.