UK Data
- Monday 9.30am PPI Input and Output for April previous 0.7%y/y & 2.7%y/y
- Tuesday 12.00am RICS Housing Survey for April previous 25.5 3m%bal.
- Tuesday 9.30am CPI for April previous 3.1%y/y
- Wednesday 9.30am Average Earnings for March previous 4.6% 3m avg.
- Wednesday 10.30am BoE release Inflation Report
- Friday 9.30am Retail Sales for April previous 0.3%m/m
Last week saw another mixed bag of data from the UK. Halifax house prices (10.9%y/y) showed continued strength in the UK housing market however both industrial output and an increased trade deficit will have disappointed the Sterling bulls. The main highlight however, was the Bank of England who raised rates [as expected] by 25bps to 5.50%, their highest level in six years. The news came as little surprise after consumer prices rose 3.1%y/y in March. Consequently, the market will now pay close attention to April’s figure (due out on Tuesday) and also the quarterly inflation report due out on Wednesday for signs that further tightening may still be required.
US Data
- Tuesday 1.30pm CPI for April previous 0.6%m/m
- Tuesday 1.30pm EmpireState Survey for May previous 3.8
- Tuesday 2.00pm Treasury International Capital System (TICS) for March previous $58.1bn
- Wednesday 1.30pm Housing Starts for April previous 1.518m
- Wednesday 2.45pm Industrial Production for April previous -0.2%m/m
- Thursday 5.00pm Philly Fed Survey for May previous 0.2
- Friday 3.00pm Univ.Michigan Sentiment Survey for May previous 87.1
As anticipated, the FOMC kept the Fed Funds rate unchanged at 5.25% when they met last week however, the focus was on the accompanying statement which continued to highlight concerns that inflationary pressures will fail to moderate. Otherwise, data continued to disappoint with both the trade deficit ($63.89bn) and retail sales (-0.2%m/m) coming out below expectations although interestingly, negative impact on the Dollar was limited. This week, attention turns to the CPI figure on Tuesday, where the market will be looking for any signs that inflationary pressures will prevent the Fed from loosening monetary policy in the months ahead.
Euro Data
- Monday 10.00am EU Industrial Production for March previous 0.6%m/m
- Tuesday 10.00am EU GDP for Q1 previous 3.3%y/y
- Wednesday 10.00am HICP for April previous 1.9%y/y
The ECB elected to keep rates unchanged at 3.75% at last week’s meeting however, the focus was on the accompanying statement where Trichet stated that the committee will continue to remain vigilant against inflation. Consequently, most commentators are now expecting a 25bps hike at the next meeting on 7th June. This week, the market will focus on Tuesday’s GDP figures for confirmation of a healthy European economy.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| UK(MPC) |
5.50% |
+25bps |
10/5/07 |
7th June |
| US (FED) |
5.25% |
+25bps |
29/06/06 |
28th June |
| EU (ECB) |
3.75% |
+25bps |
08/03/07 |
7th June |