08/06/2015- Last week’s markets and economic data expected in the week ahead
Economic data released last week was broadly positive. A host of purchasing managers’ indices covering manufacturing and services sectors were released; the positive highlights being the US manufacturing and Chinese services indices both posting healthy rises in May; whilst on the negative side the UK and US services indices both retreated in May, although both remain at very healthy levels. Elsewhere, Eurozone inflation rose to 0.3% in May (from zero in April), and the US economy created 280,000 jobs in May, the strongest month of job creation year-to-date.
Away from data points, European Central Bank president Mario Draghi fuelled a sell-off in Eurozone government bonds when commenting that debt markets had to get used to volatility in a low interest rate environment; the Organisation for Economic Co-operation and Development cut its global GDP growth forecast for this year to 3.1% (from 3.7% forecast in November) following a weak first quarter for the global economy; and the International Monetary Fund urged the US Federal Reserve to wait until next year before raising interest rates, arguing that ‘raising rates too soon could trigger a greater than expected tightening of financial conditions or a bout of financial instability, causing the economy to stall’.
Stock markets posted a broadly negative week. The FTSE 100 index fell by 2.57% over the course of the week; the S&P 500 index fell by 0.69%; the Dax index fell by 1.90%; whilst the Nikkei index fell by 0.44%. In sovereign bond markets, yields rose last week; the UK 10-year Gilt yield is currently at 2.19%, the US 10-year Treasury yield is at 2.37% and the German 10-year Bund yield is at 0.85%.
Economic data due for release this week is shown below. Revisions to Eurozone and Japanese GDP growth in the first quarter could prove to be the highlights.
China – Trade balance
Japan – Q1 GDP growth (final)
Eurozone – Q1 GDP growth (2nd est.)
China – Inflation
UK – Trade balance
US – Retail sales
China – Retail sales
China – Industrial production
Eurozone – Industrial production