There are public holidays in the UK and US on Monday, so slighter shorter diaries for data, but the big item to watch this week will be the European election results and subsequent scramble to fill the top jobs. The race to succeed Theresa May as British prime minister is likely to dominate UK politics as the candidates set out their stalls, with their approaches to Brexit on display. Theresa May’s last week as Prime Minister will likely bring significant volatility for the pound despite a distinct lack of UK centric economic releases. With bank holidays in both the UK and US on Monday, we are looking at a four-day week for many.
Elsewhere, Germany flies the flag for Europe, with GfK’s consumer confidence, unemployment, and CPI releases. Elsewhere, look out for US gross domestic product (GDP), the Canadian rate decision, and a raft of Chinese data points towards the latter part of the week.
And, as in recent weeks, global markets will keep a close eye out for any developments in the US-China trade war. Extra tariffs of up to 25 per cent on $200bn of Chinese exports to the US and $60bn of US exports to China are set to come into play at the end of the week.
Economic data: China’s official manufacturing PMI data for May are released on May 31. As the impasse on trade between Washington and Beijing drags on, markets are becoming increasingly concerned about the impact that higher tariffs on Chinese imports are having on the mainland’s economy. On the flip side of that coin, the US consumer confidence survey for May is out on Tuesday. The Federal Reserve Bank of New York has calculated the latest round of tariffs will cost the average US household $831 this year, which one might reasonably expect to begin weighing on consumer sentiment, if not start to manifest in other data. Personal consumption income and expenditure, which are closely monitored by the Federal Reserve, are also slated for the Friday morning, giving another snapshot of the US consumer and inflation.
Other first-tier data releases this week include the first-quarter gross domestic product readings for India and March GDP for Canada, both out on May 31, while a day earlier there is the second reading of first-quarter GDP for the US. Turkish first-quarter GDP data on Friday will probably show the nation moving out of its first recession in about a decade, but economists are not sure the country is out of the woods yet, and point to the possibility of another contraction this year. In Brazil, data look set to head the other way, with Thursday’s GDP likely to confirm that Latin America’s largest economy contracted in the first quarter for the first time since emerging from recession in 2017.