What is in play in the Global Week Ahead?

Uncertainty from Washington D.C.'s tariff tactics remains rife.

But investors realize: whatever U.S. President Donald Trump threatens doesn't tend to last long before he delays or backs down, meaning recent volatility has ebbed.

This tendency to U-turn, dubbed the TACO trade — "Trump Always Chickens Out" — has caught on.

But it's also given investors something to bank on.

So, they can focus on upcoming reads on Consumer Price Inflation (CPI) and trade.

Next are Reuters’ five world market themes, re-ordered for equity traders—
 

(1) The TACO trade is a meaningful geopolitical concept

The high-voltage volatility that shook markets in April and through May has subsided, with investors becoming accustomed to Trump's on-again-off-again approach to anything from tariffs to personal relationships — the meltdown with erstwhile DOGE chief and Tesla (TSLA) CEO Elon Musk being the latest.

Wall Street's fear-gauge, the VIX index, has slipped back below the 20-line that many view as a watermark.

Since Trump became the 47th president on January 20th, the index has topped 20 on 47 occasions. In the five months prior to that, it breached that level 18 times.

In the last month, there have been just seven days when the VIX has popped above 20, compared with every day from April 2 "Liberation Day" to early May.

If anything, the TACO trade is taking some spice out of the market.
 

(2) Wednesday at 8:30 am EST, the May U.S. consumer inflation (CPI) data lands.

Investors are hoping any rise in Wednesday's May consumer inflation report won't be as severe as feared, given Trump's erratic trade tactics.

Recent data shows inflation falling close to the Federal Reserve's +2.0% target. Price pressures in manufacturing and services sectors are picking up, however.

A good gauge of markets' long-term inflation view indicates only moderate concern.

The inflation breakeven rate on five-year Treasury Inflation Protected Securities suggests investors believe the rate will average less than 0.3 percentage points above the target for the next five years.

The Fed's most recent Beige Book showed economic activity is weakening, while costs and prices are rising across the different regions — a combination policymakers do not want to see.

Traders expect the Fed to make no rate change at its June 18th meeting.
 

(3) On Monday, macro data from Mainland China focuses markets on trade issues.

Washington and Beijing's trade spat has brought a familiar issue back to the surface.

China has a stranglehold on global supply of so-called rare earths, critical ingredients in almost every high-tech device out there, from cars to cruise missiles.

When China cuts off supply, everything withers.

The auto industry is feeling it. Suzuki suspended production of the Swift subcompact, weeks after Ford F did the same for its Explorer SUV.

The White House has blasted Beijing for reneging on tariff rollbacks agreed in Geneva last month, but China is doing the same, lambasting the U.S. over revoked student visas and cutting-edge chip curbs.

Chinese trade data on Monday will illuminate what's at stake, while inflation figures that day will show if Beijing's efforts to stoke domestic demand are working.
 

(4) On Friday, macro data from the European Union will focus on trade there.

April trade data for the European Union on Friday, June 13th could offer a reasonably clean read on where things stood as Trump's on-off tariffs began to roll out.

The E.U. is firmly in the U.S. president's crosshairs.

Trump has said more than once the sole purpose of the E.U. is to "take advantage" of America, on the grounds that his country boasts a $200 billion trade deficit with the bloc in goods alone, making the E.U. its second-biggest goods trade partner behind China.

E.U. sales of cars, steel, pharmaceuticals and luxury goods and apparel among other things are big business.

Trump on May 23rd said he would impose a 50% tariff on all E.U. imports, only to back down two days later by delaying the duties by a month after a "very nice call" with European Commission President Ursula von der Leyen.
 

(5) On Wednesday, the U.K. government presents a spending review. Bond vigilantes know this.

Britain, often a prime target for bond vigilantes that attack indebted governments for financial mismanagement, has been pushed into these traders' peripheral vision by U.S. budget concerns.

The Labour government's first spending review on Wednesday could bring the UK back into the spotlight.

Even if finance minister Rachel Reeves manages to slash departmental spending, this will merely highlight how few cost-cutting options she has left, Bank of America says.

U.K. public debt has swelled, leaving Reeves minimal headroom to avoid breaking self-imposed fiscal rules and less able to resist tax hikes.

Still, businesses and borrowers still scarred by the gilt market riot after then Prime Minister Liz Truss' 2022 mini-budget may prefer higher taxes if that lowers the odds of bond vigilantes showing up.
 

Zacks #1 Rank (STRONG BUY) Stocks—

I picked three large cap European stocks from our #1 list this week.

(1) Compagnie de Saint-Gobain - Unsponsored ADR (CODYY Quick QuoteCODYY - Free Report) : This is a $23 a share stock, with a market capitalization of $57.5B. The company operates in the Zacks Building Products-Miscellaneous industry. I see a Zacks Value score of B, a Zacks Growth score of B, and a Zacks Momentum score of F.

Compagnie de Saint-Gobain S.A. designs, manufactures and distributes materials and solutions for the construction and industrial markets.

The company offers glazing solutions for buildings and vehicles under the Saint-Gobain, GlassSolutions, Vetrotech and SageGlass brands; plaster-based products for construction and renovation markets.

Compagnie de Saint-Gobain S.A. is based in Courbevoie, France.

(2) Natwest Group (NWG Quick QuoteNWG - Free Report) : This is a $14 a share stock, with a market capitalization of $57.5B. The company operates in the Zacks Foreign Bank industry. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of B.

Natwest Group plc operates as a banking and financial services company.

It provides personal and business banking, consumer loans, asset and invoice finances, commercial and residential mortgages, credit cards and financial planning services, as well as life, personal and income protection insurance.

Natwest Group plc, formerly known as The Royal Bank of Scotland Group plc, is based in Edinburgh, the United Kingdom.

(3) Lonza Group (LZAGY Quick QuoteLZAGY - Free Report) : This is a $68 a share stock, with a market capitalization of $49.2B. The company operates in the Zacks Medical Products industry. I see a Zacks Value score of D, a Zacks Growth score of C, and a Zacks Momentum score of B.

Lonza Group AG operates as a supplier to the pharmaceutical, healthcare and life-science industries.

The company divides its activities into four divisions: Life Science Ingredients; Microbial Control; Custom Manufacturing, and Bioscience.

• The company's Life Science Ingredients segment produces nutrition ingredients for applications in nutrition (food, feed and pharmaceutical application) and chemical intermediates for the agricultural industry. 
• The Microbial Control division focuses on five areas: hygiene, wood protection, water treatment, oil/gas applications, and industrial preservation and comprises products ranging from disinfectants to household cleaning products. 
• The Custom Manufacturing division comprises products used in pharmaceuticals sector. 
• The Bioscience division comprises bioscience products, including cell culture and molecular biology tools for research, tests for microbial detection, and media used in the production of therapeutics. Lonza Group AG is headquartered in Basel, Switzerland.

Key Global Macro

Macro reports, and not political events, appear to be the key moments this week.

On Monday, the Mainland China CPI and PPI for May is out, constant with the prior y/y CPI reading of -0.1%. The PPI data was down -3.3% y/y, 60 basis points below the previously reported -2.7%.

Mainland China’s exports and imports for May also come out. In Yuan terms, exports are up +4.8% year-over-year — though down -35% in exports to the U.S. — while imports dropped -3.4%, following a scant increase of +0.8% y/y the prior month.

On Tuesday, Japan’s PPI for May comes out. The prior y/y PPI reading there was up a notable +4.0%.

Mainland China’s Foreign Direct Investment (FDI) comes out for May. The prior reading was down -10.9% y/y.

On Wednesday, the U.S. Consumer Price Index (CPI) for May comes out at 8:30 am ET. 

• The broad CPI for April was up +2.3% y/y
• The core (ex-food & energy) CPI +2.8% y/y

Does the U.S. CPI data matter to stock and bond markets anymore?

On Thursday, weekly U.S. initial unemployment claims come out. The prior week has risen to 247K, with the 4-week moving average at 235K.

On Friday, the University of Michigan consumer sentiment index for June comes out. The prior reading was a low 52.2.

The European Union (E.U.) puts out construction output (prior -1.1% y/y), industrial production (+3.6% y/y), and trade balance (prior +27B euros).
 

Conclusion

On May 30th, Zacks Research Director Sheraz Mian put out fresh EPS comments—

“The magnitude of cuts to Q2-25 estimates since the start of the period is bigger and more widespread relative to what we have become used to seeing in the post-COVID period.

“Since the start of April 2025, Q2-25 estimates have declined for 15 of the 16 Zacks sectors.

“(Aerospace is the only sector whose estimates have increased).

“The largest cuts came from the Transportation, Autos, Energy, Basic Materials, and Construction sectors.

“Estimates for the Tech and Finance sectors, the largest contributors to the S&P500 index, which account for more than 50% of all index earnings, have also been cut, since the quarter began.

“But as we have been pointing out in recent weeks: the revisions trend for the Tech sector notably stabilized.”

Enjoy the trading week!

Warm Regards,

John Blank, PhD.
Zacks Chief Equity Strategist and Economist