Central bank meetings, May CPI in the United States and Chinese data in brief
The coming week finds central bank meetings takes place in the euro zone, Australia, India and Thailand while a series of inflation data will be the center of attention, especially US CPI and consumer confidence figures. China will also publish Services IPM and inflation data alongside Trade the May numbers, which will be watched closely as the virus situation showed early signs of improvement midway through the second quarter. Final Q1 GDP Eurozone and Japanese figures are also aligned in the coming week.
In his speech this week, US Federal Reserve Governor Christopher Waller struck a hawkish tone, underscoring his support for the Fed to further tighten policy rates by 50 basis points for upcoming meetings. This had reiterated the Fed’s focus on inflation after the release of Fed minutes last week. To be sure, the results of the latest PMI data showed that US private sector expansion had been weighed down by inflationary pressures, while global manufacturing data reflected that supply constraints continued to put upward pressure on stocks. costs for manufacturers. It had also been flanked by news of a record 8.1% in May, reinforcing the hawkish bias of central bankers rallying in the coming week, including the European Central Bank. Details to wrap up the ECB’s large-scale asset purchases and rate hike plans at their July meetings are expected, making this an event to watch. In the APAC region, the RBA, RBI and BoT may also raise their policy rates in response to recent inflationary trends.
Separately, in the data ledger, and the May inflation numbers will be in focus. Any upside surprises could put additional pressure on the market, especially as consensus already points to a month-over-month jump for the headline CPI. Factory gate inflation in China will also be scrutinized amid emerging signs that COVID-19-related disruptions are easing. In addition, China’s May figures will be one to watch after the sharp slowdown seen in April. Other economies to release CPI figures next week include Taiwan, Thailand and the Philippines.
Observers of the UK economy will see the release of the services and construction PMI surveys.
Easing supplier delays dampens inflation a bit
An encouraging signal from the May PMI surveys was an easing in the incidence of supplier delays reported in the US and Europe. Although indices of supply chain delays remain generally worse than at any time before the pandemic, supplier delivery times extended in May at the slowest rate since January 2021 and October 2020 in the United States. and the UK respectively, with the eurozone reporting the second smallest extension since early 2021.
While tighter supply lines from China were seen as the primary cause of deteriorating lead times in Japan and, to a lesser extent, the rest of Asia, delivery delays also eased in Mainland China, which bodes well for production capacity.
PMI Vendor Delay Indicators
As China prepares to ease some of its COVID-19 restrictions in June, the global supply situation is likely to improve further in the coming months, which could help improve gains. of production worldwide – and also to mitigate some of the unpriced heat.
However, the flip side of looser virus restrictions in China on the inflation picture will revive demand for many key commodities, which could fuel a further rise in global commodity prices, including energy.
Calendar key events
Monday, June 6
South Korea, Switzerland, Norway, New Zealand Market Holiday
Hong Kong S&P Global PMI* (May)
China (Mainland) Caixin Services PMI* (May)
CPI Thailand (May)
Tuesday, June 7
Japan All household expenditure (April)
Philippines CPI (May)
Australia RBA Cash Rate (June)
Industrial orders in Germany (April)
Taiwan CPI (May)
UK S&P Global / CIPS Services PMI* (May)
United States International Trade (April)
Canada’s Trade Balance (April)
Wednesday, June 8
GDP growth in South Korea (Q1, revised)
Japan Current Account (April)
Japan’s GDP (Q1, revised)
Repo and Reverse Repo Rates in India (June 8)
Unemployment rate in Switzerland (May)
German Industrial Production (April)
House prices in Halifax UK* (May)
Manufacturing production in Norway (April)
Thailand Overnight Repo Rates
Taiwan Trade (May)
UK S&P Global / CIPS Construction PMI* (May)
Eurozone GDP (Q1, revised)
US Wholesale Stocks (April)
Thursday June 9
RICS UK housing survey (May)
China (Mainland) Trade (May)
Eurozone ECB deposit and refinancing rate (June)
Initial unemployment claims in the United States
friday june 10
China (Mainland) CPI, PPI (May)
China (Mainland) M2, new loans, loan growth (May)
Malaysia Industrial Production (April)
CPI Norway (May)
CPI United States (May)
Capacity utilization in Canada (T1)
Unemployment rate in Canada (May)
Manufacturing sales in Canada (April)
U.S. UoM Sentiment (June, Preliminary)
* Index press releases produced by S&P Global and relevant sponsors
can be found here.
What to watch
North America: May CPI, June UOM Sentiment
Following the May US labor market report, the May CPI reading will be highly anticipated in the coming week. The Refinitiv consensus is currently pointing to an acceleration in the CPI to 0.7% in May from 0.3% previously. This is in line with indications from the S&P Global Flash US Composite PMI, which previously indicated a further increase in cost burdens for private sector companies, which were again passed on to customers at a rapid pace. Given the Fed’s focus on inflation, indications of worsening price pressures could garner more political attention and reaction. As it stands, the Fed has already indicated that further 50 basis point hikes are on the table.
Elsewhere, the University of Michigan’s preliminary June Consumer Sentiment Index will be released next Friday with consensus expectations suggesting improvements. Turning to the PMI flash future production index, private sector companies also reported improved confidence in May.
Europe: ECB meeting, euro zone Q1 GDP and industrial orders in Germany
The ECB will meet next week amid rising inflationary pressures. The market will be expecting the ECB to conclude its large-scale asset purchases and detail its interest rate hike plans in July, making this an event to watch.
The UK S&P Global/CIPS Services PMI will also be released in May after the Platinum Jubilee weekend.
Asia-Pacific: RBA, RBI, BoT meetings, China trade and inflation data, Japan Q1 GDP, Taiwan, Thailand, Philippines CPI
There will be plenty of central bank meetings over the coming week for APAC economies. The Reserve Bank of Australia, the Reserve Bank of India and the Bank of Thailand will all meet next week to update monetary policy, with a tightening of key rates not ruled out.
China’s May trade, services PMI and inflation data will also be in focus after manufacturing PMI data showed signs that the worst was over with the recent COVID-19 lockdowns. A series of figures from the APAC CPI will also be at the center of concern over the supply constraint issues that continue to plague the region.
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