Will the recovery continue?

It’s likely to be another action-packed week despite many countries seeing it shortened by public holidays. The is usually the high point of the first week of the month, but there will be competing data , and .

We have seen a shift in the markets over the past two weeks as interest rate concerns have been replaced by recession fears and risk appetite improving after a difficult period. Can it be supported?

Central bank policymakers are sure to have their say over the next week, which will naturally have an important role to play in the markets, as has been the case for much of the year. Can they satisfy investors or will they ruin the recovery?

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It will be a busy week filled with anger of economic data and central bank speeches. The majority of economic data should show general weakness. Traders will be paying close attention to Tuesday’s reading which should show significant deceleration.

On Wednesday, the report is expected to soften alongside a decline in . The main economic release will be the Nonfarm Payrolls Report.

With many companies concerned about a deceleration in , it will be important to see whether hiring remains strong. The consensus estimate for the change in non-farm payrolls is 329,000 jobs, a decent drop from the 428,000 created the previous month.

The Fed speech begins Monday with the hawkish as he discusses the economic outlook. Wednesday is a busy day with the release of and remarks from the Fed and the .

On Thursday, the Fed’s Logan speaks at an event on monetary policy implementation and digital innovation and talks about the economic outlook. On Friday, the Fed’s Brainard speaks at an event hosted by the Urban Institute.

EU

The rhetoric from ECB policymakers has become much more interesting in recent months as the central bank gradually comes to terms with abandoning its net asset purchases and negative interest rate policy.

Chairwoman Christine Lagarde made those plans clear this week — a rate hike in July and September knocking the deposit rate out of negative territory — in a highly unusual move. Others have since backed those views, with some wanting more. Commentary will remain essential.

A plethora of economic data from the Eurozone will land next week, the highlight of which will naturally be Tuesday’s inflation data. We may soon see why the ECB felt the need to lay the groundwork for impending hikes.

Inflation data from individual countries at the start of the week can provide clues as to what will happen on Tuesday when the headline Eurozone data is released.

UK

A shortened week for the UK thanks to the Jubilee bank holiday on Thursday and Friday. The rest of the week offers very little, with level two and three data released on Tuesday and Wednesday.

Russia

This week, the CBR gained another 300 basis points, bringing the key rate to 11%. This is only 1.5% above what it was before the invasion and 9% from the post-invasion peak.

The move was made to halt the appreciation of the and has had some effect. But further rate cuts are likely, with many anticipating that the ruble will remain strong regardless of central bank actions. It should be noted that the CBR is not waiting for scheduled meetings to cut rates, so another could be held before June 10.

Lots of data next week as we start to see the economic ramifications of the decision to invade Ukraine.

South Africa

A number of economic releases are due next week, including the survey and . The central bank recently increased aggressively and may not.

Turkey

the data is the highlight for next week, but frankly, no one should care what it says at this point because the central bank certainly doesn’t care. Now that external factors are to blame rather than his misguided monetary policy, it’s clear there won’t be a rate hike anytime soon, with households and businesses having to pay the price for President Erdogan’s distorted ideology. .

China

China publishes s on Tuesday and Wednesday. There is downside risk to these numbers after the recent soft data, and if the numbers are weak, Chinese stocks could face further selling.

China’s COVID-zero policy continues to dominate the economic outlook. Although Shanghai appears to be past the worst, Chinese markets remain vulnerable to spikes in cases in major cities, leading to immediate movement restrictions. Any such headlines could weigh on local equities as well as regional markets.

The PBOC appears to have capped the upside for now via the fixing. China appears conflicted over whether to allow more weakness to boost exports and lower fixations this week cannot be ruled out. It could also be a headwind for regional currencies.

India

India releases s this week and in the fourth quarter, however, markets could vary trade ahead of the next RBI meeting on June 6-8, where another rate hike is expected.

Indian equity markets have moved to the lower end of their 2022 range, while equity markets have fallen to 2022 lows. Both remain vulnerable to swings in global risk sentiment. The retracement passed the rupee, suggesting that further weakness may be ahead.

Australia

Australia publishes Q1 on Wednesday and Thursday. The trade balance will be watched closely to see if the Chinese slowdown impacts Australia’s terms of trade, which could be negative for equities.

increased the correction in the US dollar, but despite the data, the election and the changes in monetary policy, the currency’s short-term direction continues to be dominated by fluctuations in day-to-day risk sentiment.

New Zealand

No significant data next week. Like the Australian dollar, the remains hostage to the daily swings we see in investor risk sentiment in North American markets.

Japan

The Japanese PMI indices on Tuesday and Friday may only lead to short-term volatility. The continues to closely follow the directional movements of the and the .

During this time, continue to be guided by the movements of the . It’s possible that USD/JPY has a long positioning cull, but if the US yield pulls back towards 3.0%, USD/JPY might as well head higher again.

Singapore

No significant data or events.

Economic calendar

Monday May 30

• EU leaders begin special two-day meeting in Brussels
• CPI Germany
• Eurozone economic confidence, consumer confidence
• Capacity Utilization in Thailand, Manufacturing Production Index
• Machine tool orders in Japan
• GDP of Sweden

tuesday 31 may

• US consumer confidence
• Eurozone CPI
• CPI France
• CPI Poland
• Canadian GDP
• Czech Republic GDP
• India’s GDP
• GDP of Switzerland
• GDP of Turkey
• Japan industrial production, unemployment
• South Africa Trade
• Unemployment in Germany
• Mexican reserves, unemployment
• Australia Building Permits, BoP Current Account, Consumer Confidence
• China PMI
• Singapore Money Supply
• India’s GDP, Budget Deficit, Eight Infrastructure Industries
• Thailand BoP, trade
• Hong Kong fiscal balance, money supply
• Japanese retail sales, consumer confidence index, housing starts
• New Zealand building permits, business confidence
• Riksbank Governor Ingves speaks
• ECB’s Makhlouf speaks
• The Bank of Italy publishes its annual report

Wednesday, June 1

• US Construction Spending, ISM Manufacturing, Light Vehicle Sales
• The Fed publishes the beige book; also begins balance sheet runoff
• Fed’s Williams speaks at Columbia University
• Fed Bullard speaks
• Trade Australia, PMI
• Eurozone PMI
• PMI Germany
• UK PMI
• India PMI
• Thailand PMI
• Unemployment: euro zone, Italy, Russia
• Bank of Canada rate decision
• Property prices in New Zealand
• Retail sales in Hong Kong
• GDP of Hungary
• Australian GDP, house prices
• Thailand Business Climate Index
• China Caixin PMI
• Japan Capital Spending, Corporate Profits, Vehicle Sales, Jibun Bank PMI
• Russian industrial production
• BOE’s Hauser is a panelist at the New York Fed Conference on Monetary Policy and Digital Innovation
• BOE Policymakers Panel Survey Results Released
• ECB’s Knot delivers keynote speech at Bank for International Settlements ‘Green Swan’ conference
• PBOC Governor Yi Gang, ECB President Christine Lagarde and others talk about green transition

Thursday, June 2

• US factory orders, durable goods, early unemployment insurance claims
• OPEC+ begins two-day meeting
• Fed Mester talks about the economic outlook
• Riksbank Deputy Governor Jansson speaks
• Eurozone PPI
• Trade Australia
• New Zealand Terms of Trade Index
• Futures contracts in Thailand, foreign exchange reserves
• Singapore Electronics Sector Index, PMI
• Monetary base of Japan
• Unemployment in Spain
• EIA Crude Oil Inventory Report

Friday, June 3

• U.S. Possible change in non-farm payrolls: 329,000 vs. 428,000 previously, unemployment rate, average hourly earnings
• Eurozone Retail Sales, Markit Services PMI
• French industrial production
• Value of home loans in Australia
• Singapore retail sales, PMI
• The Food and Agriculture Organization of the United Nations publishes a monthly food price index

Sovereign Ratings Updates

• Austria (Moody’s)
• France (Moody’s)
• Saudi Arabia (Moody’s)
• Germany (DBRS)

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