It's a busy and important week of data and events

May 16, 2016

Main Macro Events This Week

United States: It’s a busy and important week of data and events, April CPI (Tuesday) could be the key variable for near-term market direction as it is a crucial input for the policy outlook. Inflation has been one of the major disappointments for Committee members. We’re forecasting a 0.4% climb in April, after a 0.1% March gain, with the core doubling up with a 0.2% increase from the prior 0.1%. The May NAHB housing market index (Monday), seen improving to 59 from 58 over the prior 3 months. April housing starts (Tuesday) should rise to 1.120 mln from 1.089 mln, continuing the choppy monthly pattern. Building permits should increase too, not having posted a gain since November. Existing home sales for April (Friday) are forecast rising to a 5.40 mln clip, extending the 5.1% rebound to 5.330 mln in March. Industrial production release (Tuesday) which should post a 0.2% rebound after tumbling 0.6% in March, with capacity utilization rising to 74.9% from 74.8%. The Empire State index (Monday) is expected to dip to 7.0 in May after surging nearly 9 points to 9.6 in April, but this would be only the 3rd positive number (expansionary territory) since last July. The Philly Fed index (Thursday) should bounce to 5.0 in April after dropping back below zero to -1.6 in March. The FOMC minutes to the April 26, 27 (Wednesday) policy meeting will be interesting, though they will be dated following the data reports earlier this month on employment, retail sales, and ISM manufacturing, as well as Fedspeak.

Canada: Data reports are sparse, but important for the outlook. Manufacturing (Tuesday) is expected to plunge 2.0% in March after the 3.0% drop in February. Wholesale shipments (Thursday) are seen falling 0.5% in March after the 2.2% tumble in February. Retail sales (Friday) are expected to fall 0.3% in March after the 0.4% gain in February. The ex-auto sales aggregate is projected to decline 0.2% after an 0.2% rise. CPI (Friday) is projected to gain 0.5% m/m in April after the 0.6% rise in March. April existing home sales are due on Monday, and we expect annual sales growth to slow to a 10.0% rate from the 12.2% pace in March. The Bank of Canada’s twice yearly Review is published Monday.

Europe:  Monday is a public holiday in many parts of Europe and the data calendar only starts in earnest onTuesday with Eurozone trade numbers for March, which will be followed by current account data on Wednesday. Both should show solid surpluses. Final Eurozone CPI data for April, (Wednesday) is expected to be confirmed at -0.2%. The central bank minutes for the ECB’s April meeting (Thursday).

UK: The calendar brings April inflation data (Tuesday), April CPI is expected unchanged at 0.5% y/y (median same) while core CPI is seen ebbing back to 1.4% y/y from 1.5% in March. Monthly labour reports covering March and April (Wednesday), and April retail sales (Thursday). The BoE’s warnings of Brexit consequences last week (in its quarterly Inflation Report) went down like a balloon full of euro coins with “Leave” supporters, but sterling markets remained none too perturbed.

China: China released retail sales and industrial production over the weekend, and both disappointed, which could revive fears over the economy.

Japan: April PPI (Monday) is expected to inch up to -3.6% from -3.8%. Revised March industrial production (Tuesday) is seen unchanged at 3.6%, while on Wednesday 1st preliminary Q1 GDP is forecast to have risen 0.5% q/q from the prior -1.1% outcome. March machine orders (Thursday) should be down 1.0% versus the 9.2% drop in February. Also, the March all-industry index (Thursday) is expected to bounce 0.1% m/m from -1.2% previously.

Australia: The minutes to the Reserve Bank of Australia’s May meeting (Tuesday) could be an interesting read given the surprise decision to cut rates 0.25% to 1.75%. “Unexpectedly low” inflation data in Q1 was the trigger. Assistant Governor (Financial Markets) Guy Debelle speaks (Wednesday) on “Developments in Global FX Markets and Challenges in Currency Internationalisation from an Australian Perspective.” Employment (Thursday) is expected to gain 5.0k in April after the 26.1k rise in March. The unemployment rate is seen ticking higher to 5.8% from 5.7% in March. The wage cost index (Wednesday) is expected to grow 0.4% in Q1 (q/q, sa) after the 0.5% gain in Q4.

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