MNI GLOBAL MORNING BRIEFING: US IP Seen Slowing

Following a hawkish 10 days in central bank world, the week ends with a mix of Eurozone data, along with Canadian and US manufacturing and industrial production data due in the afternoon.

Recap: SNB
The Swiss National Bank surprised markets yesterday with a 50bp hike to -0.25%, against expectations of the first 25bp tightening to be in September. SNB President Jorden added that the SNB is prepared to be active in FX markets where necessary.

Recap: BOE
The BOE hiked 25bp as expected, with the vote spilt once again at 6-3 between 25 and 50bp. The key move was the dropping of the previous forward guidance paragraph, as the BOE stressed that domestic core demand was more elevated than the US and Eurozone and increased flexibility and responsiveness of the “scale, pace and timing” of further hikes given developments in economic outlooks and inflation.

Eurozone Final Inflation & Construction (1000 BST)

The May inflation print for the Euro area is set to be confirmed at the record-high 8.1%, a 0.7pp acceleration on April and 0.3pp above expectations. Most major eurozone member states confirmed their prints at the flash levels, with only France seeing a small 0.1pp uptick on the month.

No relief was seen in May energy prices for the bloc, at +39.2% y/y (up from +37.5% in April), with a concerning 1.3pp uptick in the food/alcohol/tobacco index to +7.55 y/y. The June MPC meeting saw Lagarde confirming a 25bp hike in July and signalling a further 50bp in September.

Canada Industrial & Raw Material Prices (1330 BST)

May industrial prices are projected to soften to a milder +0.1% m/m growth from +0.8% m/m seen in April (+16.4% y/y). Raw material prices on the other hand are anticipated to expand from the April slowdown of -2.0% m/m, noting that the RMPI index includes imported goods and external price pressures mount. Energy and petroleum prices continue to be the key upwards drivers.

US Industrial Production & Capacity Utilisation (1415 BST)

A significant slowdown in US industrial production to +0.4% m/m is on the cards for May, following solid growth rates ranging from +0.8 to +1.1% m/m since the beginning of the year as manufacturing growth outpaced expectations. Another 0.2pp uptick on capacity utilization would bring it to 79.2%, the highest since December 2018.

As June PMIs begin to come in, the first contraction was seen in Wednesday’s NY Empire State manufacturing index as optimism looks muted against the backdrop of soaring inflation and expectations of waning demand.

US Leading Index (1500 BST)

The US leading index is set to edge down a further 0.1pp to a contractionary -0.4% m/m in May, highlighting a general slowing across economic indicators for the US economy.

Key policymaker appearances on today’s schedule will be the ECB’s Luis de Guindos at the ECOFIN meeting, as well as the BOE’s Silvana Tenreyro and Huw Pill taking part in the BOE Household Finance Workshop events.

*Fed rate in graph is top of range, ECB rate is deposit facility

Date	GMT/Local	Impact	Flag	Country	Event
17/06/2022	0830/0930			UK	BOE Tenreyro Opens BOE Household Finance Workshop
17/06/2022	0900/1100	**		EU	Construction Production
17/06/2022	0900/1100	***		EU	HICP (f)
17/06/2022	-			EU	ECB de Guindos at ECOFIN Meeting
17/06/2022	-			JP	Bank of Japan policy meeting
17/06/2022	1230/0830	*		CA	Industrial Product and Raw Material Price Index
17/06/2022	1315/0915	***		US	Industrial Production
17/06/2022	1430/1530			UK	BOE Pill Panels BOE Household Finance Workshop
18/06/2022	1940/1540			US	Fed Governor Christopher Waller