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MNI: PBOC To Aim To Drive Inflation Higher- Advisors

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MNI GLOBAL WEEK AHEAD - US CPI Headlines

TUESDAY - UK Labour Market Data

We had noted after last month's labour market data that we would need to see a sharp slowdown in the March private sector regular wage data in order to not exceed the BOE's previous MPR forecasts by at least 0.1-0.2ppt. The updated forecasts published in the May MPR saw an upward revision of 0.3ppt, with the BOE now looking for a 6.0%Y/Y print in the 3-months to March. This would see the 3-month average Y/Y print unchanged from last month's published print of 6.0%Y/Y. An early Bloomberg consensus looks for a tick downwards to 5.9%Y/Y in the 3-months to March. On the quantity side, the BOE and consensus both look for a 4.3% print for unemployment. In our view, the latest BOE communications deemphasised the importance of labour market data - noting that input costs were being passed through to inflation to a smaller extent.

WEDNESDAY - US CPI

US CPI inflation for April lands on Wednesday, with core CPI broadly forecast at 0.3% M/M. It would be only limited moderation from the surprisingly strong 0.36% M/M readings in both March and February after the 0.39% M/M of January. Further, initial analyst estimates that we've seen look for supercore CPI inflation at circa 0.4% M/M after a strong 0.65% M/M in March. Such a reading would be unlikely to sooth the concerns of even the more dovish FOMC participants who have called for patience whilst assessing whether the first three months of hotter than expected inflation in 2024 is a bump in the disinflation path rather than a more persistent reacceleration. Note that core PCE estimates should be honed with the CPI data, with PPI inflation unusually landing the day before – this last happened in October for the September reports.

WEDNESDAY/THURSDAY - Australia Labour Market Data

The Q1 Wage Price Index is released on Wednesday and may show a tick up in wage inflation. The RBA said in its May statement that it has peaked but is unsustainably high "given trend productivity growth". This series usually comes close to consensus. Then on Thursday April employment data is published. It has been volatile lately and so it will be important to look at recent averages. It fell 6.6k in March after jumping 117.6k in February. A moderate rise with a possible tick up in the unemployment rate given strong labour supply are possible for April. Given the RBA is "vigilant" to upside inflation risks and the labour market remains tight, this release will be monitored closely.

THURSDAY - BSP Decision

CPI data was slightly weaker than expected for April. Still headline inflation remains close to the end of the 2-4% target band. The central bank also maintained its view of upside risks to the inflation outlook. Q1 GDP data was close to expectations, but private consumption and investment showed signs of pressure from previous BSP rate hikes. Hence our expectations is that the BSP will keep rates on hold next week.

FRIDAY - Eurozone Final HICP

Eurozone final April CPI is due on Friday. No major revisions are expected from the flash release, which saw core HICP print a touch above expectations at 2.7% Y/Y (vs 2.9% prior; 2.6% cons). In particular, while services inflation finally fell below the 4.0% Y/Y handle, the 3.7% print was actually higher than many analysts had forecasted. The final release will allow for an examination of the underlying drviers of this data, with focus on whether disinflationary "Easter effects" (arising because the Easter weekend was in March this year) were perhaps smaller than expected. Additionally, the ECB's suite of underlying inflation metrics will be updated for the April data. While a June ECB cut is all but inevitable at this stage, uncertainty remains over the path of rates beyond that meeting. The MNI Policy Team's latest sources piece noted that the pullback in Fed rate cut expectations has served to somewhat reduce the scope for ECB cuts beyond June, but the incoming inflation data also remains top of mind for the Governing Council.

DateGMT/LocalImpactFlagCountryEvent
11/05/20240130/0930***CN CPI
11/05/20240130/0930***CN Producer Price Index
11/05/2024-***CN Money Supply
11/05/2024-***CN New Loans
11/05/2024-***CN Social Financing
13/05/20240700/0900EU ECB's Cipollone in Eurogroup meeting
13/05/20241230/0830*CA Building Permits
13/05/20241300/0900US Cleveland Fed's Loretta Mester
13/05/20241300/0900US Fed Vice Chair Philip Jefferson
13/05/20241530/1130*US US Treasury Auction Result for 26 Week Bill
13/05/20241530/1130*US US Treasury Auction Result for 13 Week Bill
14/05/20240600/0800***DE HICP (f)
14/05/20240600/0700***UK Labour Market Survey
14/05/20240700/0900***ES HICP (f)
14/05/20240700/0900EU ECB's De Guindos participates in ECOFIN meeting
14/05/20240730/0830UK BOE's Pill Speech at Chartered Accountants Summit
14/05/20240900/1100***DE ZEW Current Conditions Index
14/05/20240900/1100***DE ZEW Current Expectations Index
14/05/20240900/1000*UK Index Linked Gilt Outright Auction Result
14/05/20241000/0600**US NFIB Small Business Optimism Index
14/05/20241230/0830***US PPI
14/05/20241230/0830**CA Wholesale Trade
14/05/20241255/0855**US Redbook Retail Sales Index
14/05/20241310/0910US Fed Governor Lisa Cook
14/05/20241315/1515EU ECB's Schnabel speech at scientific conference
14/05/20241400/1000US Fed Chair Jerome Powell
14/05/20241530/1130**US US Treasury Auction Result for 52 Week Bill
14/05/20241530/1130*US US Treasury Auction Result for Cash Management Bill
15/05/20240130/1130***AU Quarterly wage price index
15/05/20240600/0800***SE Inflation Report
15/05/20240645/0845***FR HICP (f)
15/05/20240900/1100**EU Industrial Production
15/05/20240900/1100***EU GDP (p)
15/05/20241100/0700**US MBA Weekly Applications Index
15/05/20241215/0815**CA CMHC Housing Starts
15/05/20241230/0830***US CPI
15/05/20241230/0830**CA Monthly Survey of Manufacturing
15/05/20241230/0830***US Retail Sales
15/05/20241230/0830**US Empire State Manufacturing Survey
15/05/20241300/0900*CA CREA Existing Home Sales
15/05/20241400/1000*US Business Inventories
15/05/20241400/1000**US NAHB Home Builder Index
15/05/20241405/1505UK Bernanke Review of Bank of England Forecasting
15/05/20241430/1030**US DOE Weekly Crude Oil Stocks
15/05/20241600/1200US Minneapolis Fed's Neel Kashkari
15/05/20241920/1520US Fed Governor Michelle Bowman
15/05/20242000/1600**US TICS
16/05/20242350/0850***JP Japan GDP 1st Estimate
16/05/20240130/1130***AU Labor Force Survey
16/05/20240430/1330**JP Industrial Production
16/05/20240800/1000**IT Italy Final HICP
16/05/20241100/1200UK BOE's Greene Speech at Make UK on Labour Market
16/05/20241230/0830***US Jobless Claims
16/05/20241230/0830**US WASDE Weekly Import/Export
16/05/20241230/0830**US Import/Export Price Index
16/05/20241230/0830***US Housing Starts
16/05/20241230/0830**US Philadelphia Fed Manufacturing Index
16/05/20241315/0915***US Industrial Production
16/05/20241400/1000US Fed Vice Chair Michael Barr
16/05/20241430/1030**US Natural Gas Stocks
16/05/20241430/1030US Philadelphia Fed's Pat Harker
16/05/20241600/1200US Cleveland Fed's Loretta Mester
16/05/20241950/1550US Atlanta Fed's Raphael Bostic
17/05/20240200/1000***CN Fixed-Asset Investment
17/05/20240200/1000***CN Retail Sales
17/05/20240200/1000***CN Industrial Output
17/05/20240200/1000**CN Surveyed Unemployment Rate M/M
17/05/20240720/0920EU ECB's De Guindos at Banking Sector Industry Meeting
17/05/20240800/0900UK BOE's Mann Speech at Economics Statistics Centre of Excellence Conference
17/05/20240900/1100***EU HICP (f)
17/05/20241230/0830*CA International Canadian Transaction in Securities
17/05/20241415/1015US Fed Governor Christopher Waller
17/05/20241700/1300**US Baker Hughes Rig Count Overview - Weekly

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