MNI GLOBAL MORNING BRIEFING: Spanish, German May Inflation Due

The week kicks off with European data, with North America seeing a very quiet start to the week due to the Memorial Day vacation. Key releases to watch today will be both Spanish and German preliminary inflation rates for May, as well as indications of any recovery or further slowing in consumer demand in the EC’s sentiment indicators.

Swedish GDP (0700)

Swedish GDP is projected to have contracted by 0.3% y/y in Q1 2022, slowing from the 1.1% q/q growth seen in the last quarter of 2021.

Spanish Flash CPI (0800)

Today’s Spanish inflation print sees a 0.2pp deceleration to +8.1% y/y in the harmonised May print. This would be the second month of slower price growth for the country, which saw inflation running at a 40-year high of 9.8% in March. Softer price growth is largely on the back of easing energy prices and improving supply chains. An uptick to +0.4% m/m from -0.3% m/m will however hint at the continued growth of core inflation as food and hospitality prices continue to accelerate.

Swiss KOF Indicator (0800)

A May uptick to 102.5 from 101.7 is pencilled in for Switzerland’s economic barometer, remaining just above the long-term average of 100, despite a substantially lower reading than 143.6 in May last year. The service industry will likely remain the key upwards driver, whilst outlooks for consumption, manufacturing and financial services will remain muted.

Eurozone Sentiment Indicators (1000 BST)

The European Commission’s economic, industrial, services and consumer confidence indicators are due today, and are projected to edge down for the economic and industrial readings, and tick up by half a point for services. The consumer confidence index will be more closely watched, following the prelim print which saw a 0.9-point improvement albeit remaining strongly pessimistic.

The proximity of the Ukraine war coupled with surging inflation of 7.4% in April continues to spook consumers. Tomorrow will see the May flash HICP reading, which will be vital in confirming whether the Eurozone has passed peak inflation.

German Flash CPI (1300 BST)

Following the morning round of state CPI readings, this afternoon’s German inflation print is not seen letting up yet in May. The flash is forecasted to bump up 0.1pp to +7.5% y/y and by 0.2pp to +8.0% y/y for HICP. This would be a fresh over-40-year high for Germany as energy and food prices continue to soar. Inflation rates are however anticipated to soften on the month by 0.3-0.4pp to +0.5% m/m for CPI and to +0.3% m/m for HICP.

Italy and France’s inflation readings will be released tomorrow, highlighting the need for monetary tightening ahead of the June 9 ECB meeting. Markets are currently pricing in a 25bp hike to kick off the cycle, with consensus looking for a front-loaded year ahead.

The sole key policymaker appearance due today will be Fed Governor Christopher Waller speaking on soft landings at the IMFS event in Frankfurt. The link to the event is in the calendar below.

Date	GMT/Local	Impact	Flag	Country	Event
30/05/2022	0600/0800	***		SE	GDP
30/05/2022	0600/0800	**		DE	Import/Export Prices
30/05/2022	0700/0900	***		ES	HICP (p)
30/05/2022	0700/0900	*		CH	KOF Economic Barometer
30/05/2022	0800/1000	***		DE	Bavaria CPI
30/05/2022	0900/1100	***		DE	Saxony CPI
30/05/2022	0900/1100	**		EU	Economic Sentiment Indicator
30/05/2022	0900/1100	*		EU	Consumer Confidence, Industrial Sentiment
30/05/2022	0900/1100	*		EU	Business Climate Indicator
30/05/2022	1200/1400	***		DE	HICP (p)
30/05/2022	1230/0830	*		CA	Current account
30/05/2022	1500/1100			US	Fed Governor Christopher Waller