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UK Data
 

• Monday 9.30am PPI Input and Output for May previous -0.3%y/y & 2.5%y/y
• Tuesday 9.30am Trade Balance for April previous -£7.0bn
• Tuesday 9.30am CPI for May previous 2.8%y/y
• Wednesday 9.30am Average Earnings for April previous 4.5% 3m avg.
• Thursday 12.01am RICS Housing Survey for May previous 28.9 3m %bal.
• Thursday 9.30am Retail Sales for May previous -0.1%m/m

Last week saw signs of slowing in the housing market with the Halifax house price index (0.3%m/m, 10.3%y/y) indicating that four rate hikes in the past ten months are beginning to take effect. This was followed by industrial and manufacturing production both marginally exceeding expectations. The main event however was the Bank of England meeting where the MPC left interest rates unchanged at 5.50% following the decision to raise rates in May. The market will now pay particular attention to PPI, CPI and average earnings data this week for any indication that further tightening is still required in the months ahead. 
 

US Data
 

• Wednesday 1.30pm Import Prices for May previous 1.3%m/m
• Wednesday 1.30pm Retail Sales for May previous -0.2%m/m
• Wednesday 7.00pm Fed release Beige Book
• Thursday 1.30pm PPI for May previous 0.7%m/m
• Friday 1.30pm CPI for May previous 0.4%m/m
• Friday 1.30pm EmpireState Survey for June previous 8.0
• Friday 3.00pm Michigan consumer sentiment for June previous 88.3

Last week’s calendar was sparse in terms of data however the releases that did come out were both strong. The ISM Non Manufacturing Survey (59.7) far exceeded expectations, as did the trade balance     

(-$58.5bn) where the weaker Dollar of late has helped US exporters. This week, attention turns to inflation data where the market will be looking for confirmation that concerns about price pressures will keep the Fed on their toes and prevent them cutting rates in the months ahead. Also of interest will be retail sales for confirmation that the economy remains robust.

Euro Data     

• Tuesday 10.00am EU Industrial Production for April previous 0.4%m/m
• Thursday 10.00am EU HICP for May previous 1.9%y/y
• Friday 10.00am EU Trade Balance for April previous €7.4bn

The ECB raised rates last week, in line with expectations to 4.00%, however, the key was in the accompanying statement where Trichet refused to give an indication as to the likelihood of further monetary tightening in the months ahead. With the money markets still pricing in at least one more rate rise, the market will pay close attention to data forthcoming data releases, in particular HICP for any signs that inflationary pressures warrant further rate hikes.

Interest rate outlook