The week ahead – week commencing Monday 3rd of June
Theresa May heads for the exit this week, with a full raft of data points protecting the volatility of the week just gone is expected to go on. Central banks perform a critical role, with the RBA predicted to cut rates. UK PMI surveys should shed light on the economy as we head towards the Brexit deadline. And have an eye out for US-led volatility, with the week ending with the all-important jobs report.
The focus will likewise be on how the global markets behave when they open on Monday after the latest salvo between Beijing and Washington. Tension rose over the weekend when China raised tariffs on $60bn of US goods, while the US collected 25 percent tariffs on many Chinese goods arriving at its ports.
Europe has a hectic week coming up, too. The ECB is set to keep rates on hold when it meets on Thursday — no surprises there — but it will also publish a new set of staff estimates, which are expected to show upward revisions to growth for the first time since December 2017. This will in time feed into the specific minutiae of the bank’s third phase of low-cost loans targeted longer-term refinancing operations, known as TLTROs, which the central bank’s president Mario Draghi is scheduled to reveal at this meeting. The question of who will succeed Mr Draghi is expected to feature heavily in the press conference after the meeting as the long process of installing the new heads of key EU institutions follows the European parliamentary elections.
The European Commission also publishes an estimate of the compliance of individual countries with the bloc’s fiscal rules. Italy is regarded as most at risk, having transgressed the debt reduction rule in 2017 and 2018.
Economic data The US labour market remains one of the bright spots for an economy that has experienced a mixed batch of data in recent weeks. Economists expect 83,000 jobs to have been added in May and for the unemployment to stay steady at a historically low level of 3.6 percent. Factory orders are out on Monday, private sector payrolls, services sector activity and the Federal Reserve’s Beige Book on Tuesday, and trade balance data are released on Thursday.
Eurozone data for the employment rate is out on Tuesday, along with the first take on inflation. The final GDP print for the bloc is released on Thursday, and all are due over the next few days.