Investors might feel skittish this week, as the economic calendar pulls inflation back into focus.
US: Will US monthly inflation cross 1%
Though it’s not the fullest week for US data, the potential impact of Thursday’s CPI readings can’t be overstated.
The figures for April were meant to show a month-on-month drop, from 0.6% to 0.2%. Instead, it unexpectedly rose to 0.8%, or 4.2% year-on-year, the sharpest increase since September 2008.
As for the core data, that was even more alarming. Rather than hold steady at 0.3%, it shot to 0.9% – that’s a year-on-year reading of 3.0%, against the 2.3% forecast. For a rather sobering bit of context, the monthly core figure was the highest since 1981.
For both the core and standard CPI figures, a 1.0%-plus reading is more than a possibility this Thursday. If the numbers do cross that symbolic level, it could reignite investors’ fears over the impact of inflationary pressures on interest rates and monetary policy at large.
Before that there’s not a lot on beyond Tuesday’s trade balance number. Thursday then also sees the usual jobless claims reading, which last week dropped to a pandemic-low of 385,000. Friday, finally, ends with the preliminary consumer sentiment and inflation expectations figures from the University of Michigan.
Early on Friday morning there is also a data dump from China, including fixed asset investment, industrial production and the latest unemployment rate. Most pertinent to the Western markets is the retail sales reading, which last month fell from 34.2% to 17.7%.
UK: Lockdown lifting date moves closer
Between the Halifax HPI on Monday, and Friday’s monthly GDP, industrial and manufacturing production readings, there’s not a whole lot of scheduled news for the FTSE and pound to work with this week.
However, the closer we move towards June 21st, the more heightened concerns may become around the Delta covid-19 variant and the likelihood that the government’s lockdown-lifting date will be adhered to.
Eurozone: Central Bank meeting
The Eurozone is busier than elsewhere thanks to Thursday’s ECB meeting, one that could be interesting given the faster-than-forecast climb in the region’s inflation.
Around that meeting you’ve got German factory orders on Monday, German industrial production and the revised Eurozone-wide Q1 GDP reading on Tuesday, French and Italian industrial production on Thursday, and French inflation on Friday.
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