Inflation still the name of the game
Latest US inflation numbers are in markets' sight, especially since Federal Reserve policymakers have come out in force to correct any misconception about their determination to slay decades-high inflation with big rate hikes.
The fallout from Nancy Pelosi's high-profile visit to Taiwan will be watched closely, as will Chinese and UK data while Ukraine is hoping for a debt payment freeze from international investors.
Here's your week ahead in markets from Kevin Buckland in Ottawa, Ira Iosebashvili in New York and Andy Bruce, Karin Strohecker, Dhara Ranasinghe and Vincent Flasseur in London.
Wednesday's July US inflation print is shaping up as a key test for a summer rally in US stocks that has lifted the S&P 500 to multi-week highs.
The benchmark index is up 14 per cent from its mid-June low, supported in part by expectations that the Federal Reserve will be less hawkish than previously anticipated.
Fed officials have pushed back against the idea that they will be less aggressive in a so-called dovish pivot.
Any signs that inflation is not yet peaking after the Fed's 225 bps worth of rate hikes could provide a reality check to markets hopeful of a soft landing for the economy.
Analysts polled by Reuters forecast annual inflation at 8.9 per cent in July versus 9.1 per cent in June, which was the largest increase since 1981.
US House of Representatives Speaker Nancy Pelosi's visit to Taiwan, which China claims as its own territory, means US-China tensions are rising again.
To be fair, the selloff in world stocks and the Taiwan dollar as well as the rush to safe havens such as US Treasuries quickly subsided.
Still, market sensitivity to political risk is high since Russia's invasion of Ukraine in February. China announced fresh military drills on Monday in the seas and airspace around Taiwan. It launched unprecedented live-fire military drills in areas that ring Taiwan following Pelosi's visit. Taiwan says this violates United Nations rules and invades its territorial space.
Scalded by Russia, investment funds have already started to tread carefully in China. No doubt, investors will remain alert to further signs of trouble in the East.
Cash is cheap in China, because of an abundance of it sloshing around amid government measures to support an economy scarred by zero-Covid policies.
The key money rate, the overnight repo rate, is languishing at a 1-1/2-year low below 1 per cent, and data due as early as Wednesday will show the state of new loans and total money supply.
Conditions need to be easy, with the country set to miss its original growth target of 5.5 per cent. Beijing has shifted to trying to keep economic expansion within a "reasonable range".
Thankfully, consumer price inflation has been manageable at 2.5 per cent, well below the official 3 per cent target, even if it is at nearly two-year highs. The latest reading is also due Wednesday.
Covid, though, has been more temperamental, with a new flare-up in the port city of Yiwu threatening further supply chain snarls.
How close is Britain to falling into recession? That's the big question ahead of economic growth figures next Friday, following dismal Bank of England forecasts.
The BoE reckons a new slump will begin at the end of this year but other top forecasters, such as the National Institute of Economic and Social Research, think it might start in the current quarter.