UK Data
- Wednesday 9.30am MPC Minutes from the meeting on 6/7th June
- Thursday 11.00am CBI Industrial Trends Survey for June previous 5.0
Last week saw signs that price pressures appear to be easing in the wake of four interest rate hikes in the past ten months. Headline CPI (2.5%y/y) showed its lowest reading for seven months as recent energy price cuts start to feed through to the consumer. PPI Input (1.1%y/y) failed to live up to market expectations; however the MPC will remain wary of output prices (2.5%y/y) which will impact the consumer. There was also good news from the retail sector where sales rose +0.4%m/m indicating that consumer spending remains strong despite the increased cost of borrowing. The highlights on this week’s calendar will be the CBI industrial trends survey where the market will be looking for confirmation of a robust UK economy and the Minutes from the last Bank of England meeting to see how many of the members voted for a 25bps hike.
US Data
- Tuesday 1.30pm Housing Starts for May previous 1.528m
- Thursday 5.00pm Philly Fed Survey for June previous 4.2
As with the UK, the focus in the US last week was on inflation where the headline CPI figure came out slightly above expectations at 0.7%m/m. However, this was offset by the core figure which only rose +0.1%m/m against expectations of +0.2%m/m. Nevertheless, the Fed are likely to continue to remain vigilant against inflation following import prices (+0.9%m/m) and PPI (+0.9%m/m) and this was also confirmed in the release of the Beige Book. The other highlight was retail sales (+1.4%m/m) which was encouraging in the wake of further slowing in the housing market. This week, attention returns to the housing sector where investors will be looking for any signs that the market is bottoming out.
Euro Data
- Tuesday 10.00am German ZEW Economic Sentiment Survey for June previous 24.0
- Thursday 9.00am Manufacturing and Services PMI for June previous 55.00 and 57.3
- Friday 9.00am German IFO Business Sentiment Survey for June previous 108.6
- Friday 10.00am EU Industrial New Orders for April previous 2.7%m/m
With the market uncertain about the path for EU interest rates in the coming months, data releases are likely to be closely scrutinised, especially the negative releases. This proved to be the case last week with EU industrial production (-0.8%m/m) which saw the Euro trading slightly softer against most major currencies. This week, the focus will be on the German ZEW and IFO surveys where the market will be looking for confirmation of strong economic and business sentiment in Europe’s largest economy.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| UK(MPC) |
5.50% |
+25bps |
10/5/07 |
5th July |
| US (FED) |
5.25% |
+25bps |
29/06/06 |
28th June |
| EU (ECB) |
4.00% |
+25bps |
06/06/07 |
5th July |