Week Ahead Calendar 7 May – 13 May 2018

7th May 2018

There are only a handful of tier-one data releases this week, including US PPI and CPI-inflation April data and March figures for German industrial output and exports. The Reserve Bank of New Zealand and Bank of England hold policy meetings with both expected to keep rates unchanged. The RBNZ may well err on the dovish side and markets will be looking for signs as to whether the BoE has left the door open to a rate hike before year-end.

Monday 7th May

Eurozone: European Central Bank board members Praet speaks

United States:  FOMC members Barkins, Evans and Kaplan speak

Tuesday 8th May  

Australia: March retail sales. Retail sales growth has steadily risen since October and hit 2.7% yoy in February. But unless consumer demand can move the needle on CPI-inflation stuck at 1.9-2.0% yoy for the past year the Reserve Bank of Australia is likely to maintain a steady line of being in no rush to even contemplate an interest rate hike.

Germany: March industrial output and exports. Germany remains the Eurozone’s powerhouse but business confidence and growth in output and exports have collapsed in recent months. Industrial output growth slowed sharply to 2.6% yoy in February from 6% yoy in the previous three months and export growth, the German economy’s engine, was of a similar magnitude. Markets will be looking for signs of further slowdown in the Eurozone’s largest economy.

Wednesday 9th May

United Kingdom: April British Retail Consortium (BRC) sales. The BRC measure can provide some indication of how retail sales performed before the release of official data and markets will be looking for a pick-up after cold and wet weather was blamed for weak sales in March. But the correlation between the two measures is far from perfect and in any case the BRC numbers are unlikely to have any material impact on markets’ view that the probability of a BoE rate hike on 10th May is nearing zero.

United States: April PPI-inflation. Producer price inflation data usually get less market attention than consumer price inflation releases. However, PPI-inflation – which rose to a 4-month high of 3% yoy in March – tends to feed through to CPI-inflation, albeit with a lag, and may thus provide an in inkling as to whether CPI-inflation will continue to rise in coming months.

New Zealand: Reserve Bank of New Zealand policy meeting. The RBNZ is widely expected to leave its policy rate unchanged at 1.75% but it may err on the dovish side given that CPI-inflation has in the past year halved to 1.1% yoy.

Thursday 10th May

United Kingdom: March industrial production. Unlikely to be a market mover as we already know that GDP growth was a very weak 0.1% qoq in Q1 and markets will be focussed on the MPC meeting a few hours later.

United Kingdom: Bank of England policy meeting. Markets are now pricing only an 8% probability of a 25bp rate hike so will likely focus on the accompanying policy statement and macro forecasts and Governor Carney’s press conference for indications as to whether a hike is still on the cards later in the year. Carney has been very critical of Brexit and its impact on the UK economy and may flag that Brexit negotiations and parliamentary votes could make it harder for the BoE to hike before year-end. Another point of interest will be whether any of the nine Monetary Policy Council members dissented and voted for a rate hike.

United States: April CPI-inflation. Consensus forecast is for a small rise to 2.5% yoy from 2.4% yoy in March which would tally with modest wage growth. A slow and steady rise in US inflation would likely see markets’ core scenario remaining at two more rate hikes this year.

Friday 11th May

Eurozone: European Central Bank President Draghi speaks