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UK Data
 

• Tuesday 8.00am Halifax House Prices for April previous 1.0%m/m
• Wednesday 10.30am BRC Shop Price Index for April previously 0.7%y/y
• Thursday 9.30am Industrial and Manufacturing Production for March previously -0.2%/-0.6% m/m
• Thursday 9.30am Trade Balance for March previously £-6.8bn
• Thursday 12noon BoE MPC interest rate decision

The CBI Distributive Trades survey came in much stronger than expected at 44% from 32% previously. Wednesday saw a drop in mortgage approvals for April, but that may just be due to the timing of Easter. No premier league data from the UK this week and the major event will be the BoE interest rate announcement at noon on Thursday. As CPI came in at 3.1% last month, prompting the BoE Governor’s letter to the Chancellor, the market is taking it as a virtual certainty that there will be a 25 basis point rise. The Quarterly Inflation Report is not released until the following Wednesday to gauge exactly the BoE’s inflation expectations, but the market would be very surprised if they do not raise rates this week.

US Data

• Wednesday 19.15pm FOMC Interest Rate Announcement
• Thursday 1.30pmUS Trade data for March previously $-59.1bn
• Friday 1.30pm PPI for April previous 1.0% m/m
• Friday 1.30pm Retail Sales for April previous 0.7% m/m

Another week of contradictory data from the US, with mixed survey data in the form of the Chicago PMI and the ISM surveys last week. The payroll data on Friday was weaker than anticipated with 88k new jobs created against expectations of 100k. There were also downward revisions to the 2 previous months and the unemployment rate ticked up to 4.5% from 4.4% previously. Not much data this week, but it is top draw. The FOMC are not expected to alter rates on Wednesday, but as always the statement will be closely scrutinised for signals of future intentions. US trade data on Thursday is expected to show a marginal increase to -$60bn. But the Friday data of PPI and Retail sales will be viewed as more important. Headline PPI is expected to drop to 0.5% m/m from 1.0%, but excluding the volatile food and energy elements, it is expected to show an increase of 0.2% m/m against 0% change previously. Retail sales are expected to slow to 0.4% m/m from the strong 0.7% previously, may be confirming worries that the weak housing market will feed through to weaker consumer spending.

Euro Data 

•  Tuesday 11.00am German Industrial production for March previous 0.9% m/m
• Thursday 12.45pm ECB Interest Rate announcement followed by press conference at 1.30pm

Last week’s inflation data indicated subdued inflationary pressures in the Eurozone. The EU Flash HICP inflation for April was 1.8% m/m against 1.9% previously and PPI fell to 2.7% from 2.9% in March. Retail sales on Friday however were buoyant at 0.5% m/m. No major data out from the Euro zone, with only German Industrial production standing out at all. The major event is of course the ECB interest rate announcement on Thursday, with the market expecting no change this month, but a 25bp rise in June. In view of the subdued inflationary pressures mentioned above, the press conference after the decision will closely watched to see if they signal they will still raise rates in June.

Interest rate outlook