Inflation pressures remain elevated near historic highs, as worries over aggressive Fed tightening knocking the economy into recession are still on. Slowdown fears are also being exacerbated by slumping economies abroad with building fears of a recession in Europe. Stagflation risks in Europe and the UK amid the fallout from the tensions between the west and Russia over Ukraine and lockdowns in China will remain in focus although on the latter there is some sense that the worst may be behind us. The week ahead is expected to be another massive one, as Central Bankers speeches will dominate along with Inflation and Retail Sales readings from the globe.
Have a look at the most important events of the coming days in our usual weekly publication.
Monday – 16 May 2022
Retail Sales & Industrial Production (CNY, GMT 02:00) – April’s Retail Sales are anticipated to contract further at -6.0% y/y following -3.5% y/y in March, while Industrial Production should grow by only 0.7% y/y. These indicate further slowing out of China.European Commission Releases Economic Growth Forecasts (EUR, GMT 09:00) Empire State Manufacturing Index (USD, GMT 12:30) – The highly volatile Empire State data is expected to show a steep decline to 15.50 from 24.60 in April.Inflation Report Hearings (GBP, GMT 14:15)
Tuesday – 17 May 2022
RBA Meeting Minutes (AUD, GMT 01:30) – The minutes could shed some light on the RBA’s next actions, even though the RBA has already flagged further tightening ahead. On May 6, the RBA said in its quarterly monetary policy report that it will need to raise interest rates further, against the background of tightening labour markets that risk triggering a wage price spiral.Average Earnings (GBP, GMT 06:00) – Average Earnings including bonus for March are expected to remain steady at 5.4% (3Mo/Yr). The ILO unemployment rate is seen unchanged at 3.8% in March .Gross Domestic Product (EUR, GMT 09:00) – GDP s.a. for Q1 is expected unchanged at 0.2% q/q and 5% y/y.FOMC Member Bullard Speech (USD, GMT 12:00) Retail Sales (USD, GMT 12:30) – April Retail sales are anticipated to increase at 0.5% for the headline and 0.3% for the ex-auto measure, after respective March increases of 0.7% and 1.4%. Strength in core prices will lift nominal sales, though we expect an -8% drop for the CPI gasoline index that will depress gasoline sales. A continued unwind of the lift from the 2020-21 stimulus has been seen, and restraint from the end of child tax credits in January after the earlier loss of extended jobless benefits in September.Fed Chair Powell Speaks (USD, GMT 18:00) FOMC Member Mester Speaks (USD, GMT 18:30) Gross Domestic Product (JPY, GMT 23:50) – GDP for Q1 is expected to drift at -0.4% q/q and -1.8% y/y, clearly showing the impact of supply chain disruption, the energy crisis etc.
Wednesday – 18 May 2022
Consumer Price Index and Core (GBP, GMT 06:00) – The additional tightening all but evaporated, and the new projections suggest that market expectations for the rate path are much too pessimistic. The UK inflation is set to peak above 10% later in the year, and the policy report suggests that tightening in line with market pricing would leave inflation below the BoE’s target. The headline for April’s UK CPI inflation is anticipated to spike to 9.1% y/y from 7% y/y.Consumer Price Index (CAD, GMT 12:30) – The April CPI is expected to grow by 1% with core at 4.2% y/y from 5.5% y/y, adding to the backing for steady BoC policy this year.Building Permits & Housing Starts (USD, GMT 12:30) – Housing starts are expected to fall -0.7% to a 1.780 mln pace in April from a 16-year high pace of 1.793 mln in March and 1.788 mln in February. Permits are expected to fall to 1.878 mln from 1.881 mln in March and a 16-year high pace of 1.895 mln in January.
Thursday – 19 May 2022
Employment and Unemployment Rate (AUD, GMT 01:30) – The Australian jobs market is expected to show a positive employment report, with 40k jobs in April and unemployment anticipated to tick lower to 3.9% from 4.0%.Annual Budget Release (NZD, GMT 02:00) Philly Fed Index (USD, GMT 12:30) –The Philly Fed manufacturing index fell -9.8 points to 17.6 in April, a little below forecast, after surging 11.4 points to 27.4 in March. The index continues to trace a saw-toothed monthly pattern amid the various headwinds and tailwinds, though has softened since hitting a 48-year high of 50.2 last April.
Friday – 20 May 2022
Retail Sales (GBP, GMT 06:00) – UK retail sales for April are expected to give a further glimpse into geopolitical damage, with a very pessimistic outcome as forecasts sustain the contraction picture. Retail Sales declined to -1.4% m/m in March, while the April reading is seen at -1.0% m/m.MPC Member Pill Speech (USD, GMT 07:30)
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Andria Pichidi
Market Analyst
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