As markets take a slow transition into summer with earnings season now almost over, the calendar takes a bit of a break this week with US retail sales the only real highlight on the data docket.
The second revision to Q1 GDP in the Euro area, retail sales and CPI data in Canada, and final April CPI reports are due in Europe while China activity indicators are also expected. In Japan, GDP is likely to slow down to +0.0% qoq saar from +1.6% in Oct-Dec ’17 due to weather related weakness in private consumption, reversal of earlier inventory build-up, and slowdown in export momentum.
The main action will be away from data with a busy Fed-speak calendar due, especially following the latest disappointing CPI print. Overnight, Cleveland Fed President Loretta Mester spoke, and was hawkish as usual, saying she would look through ‘transitory’ factors behind recent inflationary softness,
Trade talks might come back to the fore with China’s Vice Premier Lie He traveling to Washington to continue talks with Treasury Secretary Steven Mnuchin. This week also brings a Paul Ryan-imposed deadline for a NAFTA deal. The Brexit drama continues, with the UK government still unable to find an agreement on a customs approach, but sterling doesn’t appear to be bothered.
There’s also a few Brexit meetings to flag while Italy’s political developments should also continue to be a focus. There are monetary policy meetings in Brazil, Mexico, Poland, Indonesia, Thailand and Egypt. Mexico’s BANXICO will likely hike 25bp. GDP releases in Russia and CEE.
On the geopolitical front, Monday is set for a busy day as the US opens a Jerusalem embassy while Italy is set to announce new government formation.
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As Deutsche Bank writes, with the data calendar fairly thin next week, the main focus will be on the US April retail sales report on Tuesday. As of this morning, the consensus expects a relatively solid +0.4% mom headline reading and +0.4% mom ex auto and gas print. The control group component – which goes into the GDP accounts – is also expected to show a +0.4% mom reading. Away from that we’ve got April housing starts and building permits data on Wednesday along the April industrial production print (+0.6% mom expected).
In Europe next week the main focus for markets will likely be the second flash estimate of Q1 GDP for the Euro area on Tuesday where no change from the +0.4% qoq flash is expected and the final April CPI print for the Euro area on Wednesday. The consensus for that is a +0.7% yoy core reading (no change from the flash) and +1.2% yoy headline. That all said, given the Easter holiday timing, it’s unlikely that the ECB puts much weight behind the April data. Other data worth flagging in Europe next week is the second reading of Q1 GDP in Germany on Tuesday, UK labour market stats for March and April on Tuesday where the big focus will be on wages data following some soft readings of late, March industrial production for the Euro area on Tuesday and Germany’s ZEW survey for May on Tuesday.
Finally in Asia all eyes will be on China’s April retail sales, industrial production and fixed asset investment data on Tuesday (which is expected to remain broadly stable) and Japan’s second reading of Q1 GDP on Wednesday and the final April CPI data on Friday.
As noted above, it will be a very busy week for Fed speakers with Monday’s speech by Cleaveland Fed President Mester (hawk/voter) followed by St Louis Fed President Bullard (dove/non-voter) in the afternoon at a Blockchain technology conference in New York. On Tuesday, Dallas Fed President Kaplan (neutral/non-voter) then speaks to the Council on Foreign Relations on the Outlook for the Economy and Energy Market in the afternoon, before San Francisco Fed President Williams (neutral/voter) speaks to the Economic Club of Minnesota in the evening.
Bisecting those two talks are the confirmation hearings for Fed Nominees Richard Clarida (nominated for Vice-Chairman) andMichelle Bowman (nominated for Governor). On Wednesday it’s the turn of Atlanta Fed President Bostic (neutral/voter) when he gives an economic update in Augusta, before Bullard speaks again to the media in the evening. On Thursday, Minneapolis Fed President Kashkari (dove/non-voter) speaks at a moderated Q&A in Minnesota, followed closely by Kaplan speaking again also at a moderated Q&A in Texas. Finally on Friday, Mester speaks on Macroprudential and Monetary Policy at an ECB conference in the morning, before Kaplan speaks at another moderated Q&A in Dallas and Fed Governor Brainard (dove/voter) speaks in New York.
Away from all that, there’s a few other events worth flagging next week. Those on Brexit watch will have EU Chief Brexit negotiator Michel Barnier briefing European affairs ministers on the status of talks on Monday, while EU foreign policy chief Federica Mogherini will also speak on a “Future of EU Foreign Security” panel in Brussels on the same day. From the UK side, PM Theresa May is due to meet her Brexit cabinet on Tuesday to discuss plans for a post-withdrawal customs union. Also worth noting next week is senior officials from the Euro area discussing the latest Greek bailout review on Monday, the MSCI releasing its semi-annual EM index review including China-A shares for the first time also on Monday, China Vice Premier Liu He traveling to Washington on Tuesday to continue trade talks with Treasury Secretary Steven Mnuchin, Russian state Duma discussing retaliatory measures against US sanctions on Tuesday, and finally EU leaders holding an informal dinner in Sofia on Wednesday to discuss global trade and the US decision to leave the Iran nuclear deal.
The above is summarized in the following table:
Broken down on a day-to-day basis, here are the key events courtesy of Deutsche Bank:
- Monday: Central bank speak should be the focus on Monday with the Fed’s Mester and ECB’s Villeroy both speaking in the morning in Paris, followed by the Fed’s Bullard and ECB’s Lautenschlaeger and Praet later in the day. Brexit developments could also come back to the forefront with the EU’s Barnier due to brief European affairs ministers on the status of talks. Datawise the only releases of note are Japan PPI for April and the Bank of France industry sentiment print for April. Senior officials from Euro area finance ministries are also due to meet to discuss the latest Greek bailout review.
- Tuesday: The overnight focus on Tuesday will be in China with April retail sales, industrial production and fixed asset investment data all due. In Europe, the preliminary Q1 GDP report in Germany is due, along with the Q1 GDP report for the Euro area. In the UK April and March employment data is expected while in France the final April CPI revisions are due. March industrial production data for the Euro area is also due, as well as the May ZEW survey in Germany. In the US the big focus will be on the April retail sales report, while May empire manufacturing, March business inventories and the May NAHB housing market index print are also due. Fed nominees Clarida and Bowman are due to appear for confirmation hearings while the Fed’s Kaplan and Williams are both scheduled to speak. UK PM Theresa May is also due to meet with her Brexit Cabinet while China Vice Premier Liu He is due to visit Washington and continue trade talks.
- Wednesday: Overnight, the preliminary Q1 GDP report in Japan is due along with March industrial production and April new home prices in China. In Europe the final April CPI reports for the Euro area and Germany will be the focus. In the US April housing starts and building permits, along with April industrial production will be the main highlights. The Fed’s Bostic and Bullard are both scheduled to speak while EU leaders are also due to hold an informal dinner to discuss global trade and the US decision to leave the Iran nuclear deal.
- Thursday: A fairly quiet day highlighted by the Fed’s Kashkari and Kaplan speaking in the afternoon and evening. The ECB’s Constancio is also scheduled to speak, while the only economic data of note is the April leading index, May Philly Fed PMI and weekly initial jobless claims in the US.
- Friday: Overnight, Japan will release its April CPI report. In Europe, April PPI in Germany and the March trade balance for the Euro area are due. There’s no data due in the US on Friday however the Fed’s Mester, Kaplan and Brainard are all due to speak
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Finally, looking at only the US, Goldman writes that key releases this week are the retail sales report on Tuesday and the industrial production report on Wednesday. The main US events are shown in the table below:
A detailed summary follows:
Monday, May 14
- 02:45 AM Cleveland Fed President Mester (FOMC voter) speaks: Cleveland Fed President Loretta Mester will speak at an event with the Governor of the Banque de France in Paris. Audience Q&A is expected.
- 09:40 AM St. Louis Fed President Bullard (FOMC non-voter) speaks: St. Louis Fed President James Bullard will deliver a presentation at CoinDesk’s blockchain technology summit in New York. Audience Q&A is expected.
Tuesday, May 15
- 08:00 AM Dallas Fed President Kaplan (FOMC non-voter) speaks: Dallas Fed President Robert Kaplan will give a speech at the Council of Foreign Relations in New York. Audience and media Q&A are expected.
- 08:30 AM Retail sales, April (GS +0.2%, consensus +0.3%, last +0.6%); Retail sales ex-auto, April (GS +0.4%, consensus +0.5%, last +0.2%); Retail sales ex-auto & gas, April (GS +0.4%, consensus +0.4%, last +0.3%); Core retail sales, April (GS +0.5%, consensus +0.4%, last +0.4%): We estimate core retail sales (ex-autos, gasoline, and building materials) rose at a solid 0.5% pace in April, reflecting a continued boost from previously delayed tax refunds and the continued positive impulse from tax reform. We also note scope for upward revisions to the March core measures, which appeared soft relative to chain store results. On the negative side, we expect cold and snowy April weather to weigh on sales in the building materials and clothing categories. Based on a pullback in auto SAAR but a seasonally adjusted rise in gasoline prices, we estimate a 0.2% and 0.4% respective increases in the headline and ex-auto measures.
- 08:30 AM Empire manufacturing survey, May (consensus +15.0, last +15.8)
- 10:00 AM Fed Nominees Bowman and Clarida speak: Federal Reserve Board nominees Michelle Bowman and Richard Clarida will testify in front of the Senate Committee on Banking, Housing and Urban Affairs during a hearing for their nominations. Clarida has been nominated to be a Member and Vice Chairman of the Board of Governors, and Bowman has been nominated to be a Member of the Board of Governors and would occupy the seat required to be filled by a member with community banking experience.
- 01:10 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Fed President (and incoming New York Fed President) John Williams will give a speech to the Economic Club of Minnesota in Minneapolis.
Wednesday, May 16
- 08:30 AM Housing starts, April (GS -1.4%, consensus +0.5%, last +1.9%); Building permits, April (consensus -2.3%, last +4.4%): We estimate housing starts pulled back 1.4% in April, retracing most of the 1.9% March increase. We expect cold, snowy weather to weigh on construction activity, though we believe solid single-family construction fundamentals will partly offset these effects.
- 08:30 AM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will speak on current economic conditions at an event in August, Georgia. Audience Q&A is expected.
- 09:15 AM Industrial production, April (GS +0.6%, consensus +0.6%, last +0.5%): Manufacturing production, April (GS +0.4%, consensus +0.8%, last +0.1%); Capacity utilization, April (GS +78.4%, consensus +78.4%, last +78.0%): We estimate industrial production rose 0.6% in April, as the utilities and mining categories likely rose further. We expect manufacturing production also increased modestly, reflecting strength in non-auto manufacturing but weakness in auto manufacturing.
- 06:30 PM St. Louis Fed President Bullard (FOMC non-voter) speaks: St. Louis Fed President James Bullard will give opening remarks at the Homer Jones Memorial Lecture in St. Louis. Audience Q&A is expected.
Thursday, May 17
- 08:30 AM Initial jobless claims, week ended May 12 (GS 210k, consensus 229k, last 211k); Continuing jobless claims, week ended May 5 (consensus 1,775k, last 1,790k): We estimate initial jobless claims declined by 1k to 210k in the week ending May 12. While the level of claims still looks relatively low in New York, the trend in jobless claims appears to be falling, and we expect another very low reading. Continuing claims—the number of persons receiving benefits through standard programs—rebounded last week but also appear to be trending lower.
- 08:30 AM Philadelphia Fed manufacturing index, May (GS +22.5, consensus +21.7, last +23.2); We expect the Philadelphia Fed manufacturing index to edge down 0.7pt to 22.5 in May. Our forecast reflects generally upbeat top-line results and commentary from industrial firms, though we note that uncertainty around trade policy might be weighing on business sentiment. In the April report, the headline index rebounded by 0.9pt, while the underlying composition was more mixed. Overall, the index is likely to remain at levels suggestive of moderate expansion in manufacturing activity.
- 10:45 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks; Minneapolis Fed President Neel Kashkari will participate in a moderated Q&A at an event in Minneapolis. Audience Q&A is expected.
- 01:30 PM Dallas Fed President Kaplan (FOMC non-voter) speaks: Dallas Fed President Kaplan will take part in a moderated Q&A at a Richardson Chamber of Commerce event in Texas. Audience and media Q&A is expected.
Friday, May 18
- 03:00 AM Cleveland Fed President Mester (FOMC voter) speaks; Cleveland Fed President Loretta Mester will give a speech on macroprudential and monetary policy at a conference in Frankfurt. Audience Q&A is expected.
- 09:15 AM Dallas Fed President Kaplan (FOMC non-voter) speaks: Dallas Fed President Robert Kaplan will participate in a moderated Q&A session at a University of Texas at Dallas event. Audience Q&A is expected.
- 09:15 AM Fed Governor Brainard (FOMC voter) speaks: Fed Governor Lael Brainard will give a speech on “Community Reinvestment Act Modernization” at an Association for Neighborhood and Housing Development conference in New York. Audience Q&A is expected.
Source: Deutsche, BofA, Goldman