The data and events calendar is heavy for the first week of June, with US President Trump starting today a 3-day state visit to the UK. The Reserve Bank of Australia and European Central Bank have scheduled policy meetings, with the RBA expected to cut rates 25bp, while Federal Reserve Chairperson Powell and Bank of England Governor Carney are due to speak.
On the data front, the focus will be on Purchasing Managers Indices for May in the US and UK, Eurozone CPI-inflation, Australian Q1 GDP and of course the much-focussed on US labour market figures due out on Friday.
Monday 3rd June
United Kingdom & United States: Start of three-day state visit of US President Trump. President Trump has been vocal about Theresa May’s likely successor as prime minister, giving his implicit backing to Boris Johnson and Nigel Farage. The two leaders are due to discuss amongst other things climate change and Huawei.
United Kingdom: Manufacturing PMI (May). This index of manufacturing activity has oscillated in a 52-55 range since November and analysts expect the index to have fallen to 52.0 in May from 53.1 in April.
United States: FOMC members Quarles, Barkin and Bullard to speak.
United States: ISM manufacturing PMI (May). This index slowed in Q1 and yet US growth picked up to a revised 3.1% qoq annualised from 2.2% in Q4. The forecast is for a slight rebound to 53.0 in May from a 30-month low of 52.8 in April.
Tuesday 4th June
United Kingdom: BRC retail sales monitor (May). The volume of retail sales was flat in April according to official data and the BRC survey will provide a first clue as to whether this was a one-off or the beginning of a phase of weaker retail sales.
Australia: Retail sales (April).
Australia: Reserve Bank of Australia policy meeting (05:30 London time). RBA officials have given clear hints of what is to come and analysts expect the RBA to cut its policy rate 25bp to 1.25%, following in the footsteps of the Reserve Bank of New Zealand. The question for the RBA is whether this will be a case of “one and done” or the beginning of a longer rate-cutting cycle. RBA Governor Lowe is due to speak at 10:30 London time.
European Union: Eurozone CPI-inflation (May, preliminary data). Analysts forecast that core and headline CPI-inflation fell sharply in May to 1.0% yoy and 1.3% yoy, respectively, from 1.3% yoy and 1.7% yoy in April. Weak inflation has been a concern in the Eurozone and many other developed economies with central banks responding by cutting policy rates (in New Zealand and India and likely in Australia and Russia) or by at keeping rates on hold for now (in US, UK and Eurozone).
United States: FOMC members Williams and Brainard and to speak.
United States: Federal Reserve Chairperson Powell to speak (midnight UK time). The Federal Reserve has steadfastly stuck to its position that it can afford to be patient and remain in “wait and see” mode. But FOMC member Clarida last week suggested that if US inflation does not recover soon rate cuts could be appropriate. Markets will be looking for clues as to whether Chairperson Powell has also inched towards that more dovish position. A number of investment banks are now forecasting that the Federal Reserve will cut rates this year, in line with market pricing of 56bp of cuts between now and end-year.
Wednesday 5th June
Australia: Q1 GDP. The Australian economy has not recorded a quarter of negative GDP growth for 26 years and analysts expect this impressive streak to have extended in Q1 2019, forecasting GDP growth to have doubled to 0.4% qoq from 0.2% qoq in Q4 2018. The Reserve Bank of Australia is likely to have known or at least had a very good idea of this number when it meets the previous day.
United Kingdom: MPC member Ramsden to speak.
United Kingdom: Services PMI (May). This index of economic activity in the service sector – which accounts for about three quarters of UK GDP – has been on a choppy downward trend since last June but analysts expect a modest rebound to 50.6 in May from 50.4 in April.
Eurozone: Retail sales (April)
United States: ADP non-farm employment (May)
United States: FOMC members Clarida, Bowman and Bostic to speak.
United States: ISM non-manufacturing PMI (May). The trend in this important index of economic activity in the US service sector has been downwards since September (61.6) but analysts forecast an unchanged print of 55.5 in May.
Thursday 6th June
Australia: Trade balance (April)
United Kingdom: Bank of England Governor Carney to speak. Governor Carney has been relatively quiet in recent weeks but may seek to clarify the central bank’s position in view of the ongoing political uncertainty in the UK.
European Union: European Central Bank policy meeting, statement and press conference. The ECB will most likely keep its policy rates unchanged but there have been suggestions that it may hint at a possible further delay to its expectations as to when it will start hiking rates. ECB President Draghi has so far argued that weak Eurozone growth and inflation were likely transitory although risks to the downside had increased.
United States: Trade in goods and services (April). The US deficit has been broadly unchanged around $50bn in the past three months but US President Trump’s rhetoric and recent imposition of import tariffs on China and Mexico suggest he remains intent on shrinking the United States’ deficit, particularly with its largest trading partners.
United States: FOMC members Kaplan and Williams to speak.
Friday 7th June
European Union: German trade data and industrial output (April)
United States: Labour market data (May). As often the case analysts expect the number of non-farm jobs created to have increased in line with the long-term trend (about 180,000). As important will be the evolution of workers’ earnings, with growth in hourly earnings struggling to rise from 3.1-3.4% yoy in the previous seven months.
