A more positive investor sentiment returned last week, causing global equity markets to rise and the S&P 500 to test all-time highs once again. German GDP was announced last week showing that Europe’s largest economy grew by 0.7% in the first quarter of the year compared to a reading of 0.3% in the last three months of 2015. However, the shorter term German retail sales trend were more negative showing a reduction of 0.9% in April on the previous month. This follows an even sharper fall of 1.4% in March. This slowdown in consumer spending is a potential concern for an investor and the ECB, who are wanting to see a return to inflation (which was 0%). Lack of consumer demand will make rising prices harder to achieve as retailers are more inclined to reduce prices to increase volumes. However, it is difficult to draw conclusions from such short-term data.

Japanese inflation data was announced on Friday, showing a slowdown of core CPI (inflation excluding fresh food and energy), to 0.9% in April from 1.1% in March. Interestingly, the inclusion of energy in this measure changes the reading to -0.3%, illustrating the significant effects that the lower oil price is still having on some inflation data. Importantly, the slowdown in inflation will put added pressure on the Bank of Japan to further its monetary stimulus, and cut interest rates further. The BOJ recently disappointed markets by not cutting at their last meeting, indicating that they wanted to wait and see the initial effects of negative interest rates before continuing. This latest reading may convince them to act.

Talk of another US interest rate hike is now building momentum. Many have been predicting a June rise, as well as another one by the end of the year. A recent speech by Janet Yellen, the chair of the Federal Reserve indicated that they are currently anticipating the first move to be in the “coming months” if the US economy continues to improve. Investor speculation and sentiment amount investors are that the committee may wait until after the EU referendum has passed to take action, indicating that July is a likely option. Once again the initial reaction is likely to be negative; however, markets have historically risen through rate rising cycles.

US non-farm payrolls are announced on Friday, along with jobless claims and the unemployment rate.

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