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MNI GLOBAL WEEK AHEAD: UK CPI in Focus

MNI (London)

The week ahead will see eurozone consumer and business sentiment indicators and May flash PMIs in focus.

MONDAY

Eurozone Flash Consumer Confidence: Consensus is pencilling in just under a one-point improvement from -17.5 in the May flash consumer sentiment indicator for the eurozone. Post-pandemic reopening effects, lower energy costs and fading recessionary fears have boosted eurozone consumer sentiment over recent months. The indicator is sitting over ten points higher than the Sep '22 record low and the least negative since the Feb '22 level (pre-Russia-Ukraine war).

Further detail will be released a week later, whereby we will be looking for a continuation in cooling consumer price expectations, after in April they were the softest since December 2020.

TUESDAY

May Flash PMIs: Across Europe, May PMIs are expected to show continued weakness in the manufacturing sector, set to remain firmly in contractive territory, whilst the US teeters on the edge of stalling business activity. Services PMIs are likely to cool somewhat but remain strong as robust demand prevails.

WEDNESDAY

RBNZ Rate Decision: The Reserve Bank of New Zealand will likely increase the Official Cash Rate again at its May 24 meeting, with markets and commentators tipping another 25-50bp from its current 5.25% despite emerging signs of moderating inflationary pressures. The market will watch closely for an update to the peak rate forecast. See our RBNZ watch here for more: https://marketnews.com/mni-rbnz-watch-hike-expecte...

UK Inflation Report: UK inflation is expected to cool by 1.9pp to +8.1% y/y in April, whilst prices continue to tick up on a short-term basis by +0.6% m/m. Core CPI is holding steady again at +6.2% y/y for a third consecutive month, underscoring sticky-core concerns at the BOE.

At the May policy meeting, the BOE upgraded its inflation forecasts for the 12-month horizon, with 2024 Q2 CPI seen at 3.4%, up from 1.0% expected in the February forecasting round. 2023 Q2 CPI is seen 0.3pp lower at +8.2%. The bulk of upside revision was due to stronger food inflation, currently running at a historical high. The MPC projection point to inflation risks as "skewed significantly to the upside".

Germany IFO Survey: The IFO survey is expected to ease slightly across the business climate, current and expectations indicators in May, after business sentiment edged up for a sixth consecutive month in April. Easing energy prices, cooling CPI and less-bleak global demand outlooks have assisted the recent recovery. However, with the German manufacturing PMI slipping further into contractionary territory and ZEW expectations taking another hit in May, growth optimism is faltering.

US FOMC Minutes: The May FOMC delivered a 25bp hike, which is looking like the last of the cycle. The minutes will be closely watched on Wednesday for a hint of a pause at the June meeting.

THURSDAY

Germany Consumer Confidence / Final GDP: Germany’s forward-looking GfK consumer sentiment indicator is projected to improve by a further 1.4 points to -24.3 in June, representing an eighth consecutive increase. Both economic and income expectations rebounded significantly recently, with income expectations alone recovered to pre-Russia-Ukraine war levels.

Nonetheless, the indicator remains below pre-pandemic levels, with the propensity to buy subindex remaining downtrodden.

Final Q1 GDP data is also due, likely to confirm that the eurozone’s largest economy stalled in Q1 at 0.0% q/q growth. A downside revision would see the German economy having dipped into a technical recession, following the -0.4% q/q Q4 contraction. The release will include detail on GDP aggregates, which will likely see another fall in household consumption, with retail activity having contracted m/m for all of Q1 (albeit with some revival in the service sector).

France Manufacturing Sentiment: French manufacturing sentiment will likely remain downtrodden in May, after dipping by three points in April to 101. This was the lowest since November as overall order books and firms' production expectations fell.

US GDP: The US GDP second estimate for Q1 follows the first estimate of +1.1% q/q annualised, a deceleration from +2.6% q/q recorded in Q4 2022. The +3.7% annualised jump in consumer spending despite stubbornly high inflation is likely to ease off in Q2.

FRIDAY

UK Retail Sales: Consensus is forecasting a small improvement in April retail sales to +0.2% m/m, after the March dip, whereby wet weather conditions supported the -0.9% m/m contraction. The May consumer sentiment indicator posted a fourth consecutive improvement, albeit remains firmly in pessimistic territory, implying little rebound in spending for now.

France Consumer Sentiment: French consumer confidence is expected to edge up another point in May to 84, remaining markedly below the long-run average of 100. With the propensity to make major purchases having recently weakened further, French consumer spending looks to remain pressured for the near future.

Italy Consumer / Business Sentiment: Italian consumer confidence is seen edging up again after rising to a February 2022 high of 105.5. Business sentiment is seeing cooling for a second month, due to soft production and order book expectations.

US Durable Goods Orders / Personal Income & Consumption: The April preliminary data is expected to show a -1.0% m/m contraction in durable goods orders, after aircraft orders underpinned the strong +3.2% m/m March reading. Excluding transportation, a more modest -0.2% m/m decline is pencilled in, following +0.2% m/m in March. Demand conditions in the US remain muted, with the ISM manufacturing PMI New Orders subindex signalling an eight-month trend of falling orders in April, albeit the rate of which is now easing.

US personal income and spending data for April is also due, expected to grow +0.4% m/m for both, an uptick from stalling spending in March. Services spending will likely again outweigh softer goods outlays.

DateGMT/LocalImpactFlagCountryEvent
22/05/20230900/1100**EU Construction Production
22/05/20230900/1100EU ECB de Guindos Opens ECB/EIOPA Workshop
22/05/20230900/1100EU ECB Elderson Guest Lecture Utrecht University
22/05/20231230/0830US St. Louis Fed's James Bullard
22/05/20231400/1600**EU Consumer Confidence Indicator (p)
22/05/20231415/1615EUECB Lane Panels OeNB Economics SUERF Conference
22/05/20231430/1530UK DMO Quarterly Investor/GEMM Consultation Meetings
22/05/20231500/1100US Fed's Tom Barkin, Raphael Bostic
22/05/20231505/1105USSan Francisco Fed's Mary Daly
22/05/20231530/1130*US US Treasury Auction Result for 26 Week Bill
22/05/20231530/1130*US US Treasury Auction Result for 13 Week Bill
22/05/20231600/1700UK DMO Quarterly Investor/GEMM Consultation Meetings
23/05/20232300/0900***AU Judo Bank Flash Australia PMI
23/05/20230030/0930**JP Jibun Bank Flash Japan PMI
23/05/20230600/0700***UK Public Sector Finances
23/05/20230715/0915**FR S&P Global Services PMI (p)
23/05/20230715/0915**FR S&P Global Manufacturing PMI (p)
23/05/20230715/0915EUECB de Guindos Address at European Financial Integration Conf
23/05/20230730/0930**DE S&P Global Services PMI (p)
23/05/20230730/0930**DE S&P Global Manufacturing PMI (p)
23/05/20230800/1000**EU EZ Current Account
23/05/20230800/1000**EU S&P Global Services PMI (p)
23/05/20230800/1000**EU S&P Global Manufacturing PMI (p)
23/05/20230800/1000**EU S&P Global Composite PMI (p)
23/05/20230830/0930***UK S&P Global Manufacturing PMI flash
23/05/20230830/0930***UK S&P Global Services PMI flash
23/05/20230830/0930***UK S&P Global Composite PMI flash
23/05/20230900/1000*UK Index Linked Gilt Outright Auction Result
23/05/20230915/1015UKBOE Bailey, Pill, Tenreyro, Mann at MPR Hearing
23/05/20231230/0830*CA Industrial Product and Raw Material Price Index
23/05/20231230/0830**US Philadelphia Fed Nonmanufacturing Index
23/05/20231255/0855**US Redbook Retail Sales Index
23/05/20231300/0900US Dallas Fed's Lorie Logan
23/05/20231345/0945***US IHS Markit Manufacturing Index (flash)
23/05/20231345/0945***US S&P Global Services Index (flash)
23/05/20231400/1000***US New Home Sales
23/05/20231400/1000**US Richmond Fed Survey
23/05/20231445/1545UKBOE Haskel Panellist at Richmond Fed Conference
23/05/20231530/1130*US US Treasury Auction Result for Cash Management Bill
23/05/20231700/1300*US US Treasury Auction Result for 2 Year Note
24/05/20230200/1400***NZ RBNZ official cash rate decision
24/05/20230600/0700***UK Consumer inflation report
24/05/20230600/0700***UK Producer Prices
24/05/20230800/1000***DE IFO Business Climate Index
24/05/20230830/0930*UK ONS House Price Index
24/05/20230930/1030UKBOE Bailey Keynote Speech at Mansion House Net Zero Summit
24/05/20231000/1100**UK CBI Industrial Trends
24/05/20231100/0700**US MBA Weekly Applications Index
24/05/20231230/0830*CA Quarterly financial statistics for enterprises
24/05/20231300/1500**BE BNB Business Sentiment
24/05/20231300/1400UKBOE Bailey Frieside Chat at WSJ CEO Council Summit
24/05/20231430/1030**US DOE Weekly Crude Oil Stocks
24/05/20231530/1130**US US Treasury Auction Result for 2 Year Floating Rate Note
24/05/20231700/1300*US US Treasury Auction Result for 5 Year Note
24/05/20231745/1945EU ECB Lagarde Opens Anniversary of ECB Event
24/05/20231800/1400*US FOMC Statement
25/05/20230600/0800***DE GDP (f)
25/05/20230600/0800*DE GFK Consumer Climate
25/05/20230600/0800**SE Unemployment
25/05/20230645/0845**FR Manufacturing Sentiment
25/05/20230700/0900**ES PPI
25/05/20230900/1100EUECB de Guindos Presents ECB Annual Report 2022
25/05/20231000/1100**UK CBI Distributive Trades
25/05/20231100/0700*TR Turkey Benchmark Rate
25/05/20231230/0830**US Jobless Claims
25/05/20231230/0830**US WASDE Weekly Import/Export
25/05/20231230/0830*CA Payroll employment
25/05/20231230/0830***US GDP
25/05/20231400/1000**US NAR Pending Home Sales
25/05/20231430/1030**US Natural Gas Stocks
25/05/20231430/1030US Boston Fed's Susan Collins
25/05/20231500/1100**US Kansas City Fed Manufacturing Index
25/05/20231630/1730UKBOE Haskel Speech at Peterson Institute
25/05/20231700/1300**US US Treasury Auction Result for 7 Year Note
26/05/20232330/0830**JP Tokyo CPI
26/05/20230130/1130**AU Retail Trade
26/05/20230600/0700***UK Retail Sales
26/05/20230600/0800**SE Retail Sales
26/05/20230600/0800**SE PPI
26/05/20230645/0845**FR Consumer Sentiment
26/05/20230740/0940EUECB Lane Panels Dubrovnik Econ Conference
26/05/20230800/1000**IT ISTAT Business Confidence
26/05/20230800/1000**IT ISTAT Consumer Confidence
26/05/20231230/0830**US Durable Goods New Orders
26/05/20231230/0830**US Personal Income and Consumption
26/05/20231230/0830**US Advance Trade, Advance Business Inventories
26/05/20231400/1000***US Final Michigan Sentiment Index
26/05/20231500/1100CA Finance Dept monthly Fiscal Monitor (expected)

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