ECB Forum on Central Banking
In the coming days of this week, we are not expecting to have many economic data, but it does not mean it will be a light week. In the United States, Durable goods Order, GDP, and Personal Income & Spending will tell us about the health of the US economy. Europe also will host the ECB Forum on Central Banking which can again turn the eyes on bankers' speeches.
1- US Durable Goods Orders - Monday
Despite supply chain issues and more recent fears of an economic slowdown in the past months, durable goods orders could still stay stable and strong. Durable goods orders are a good measure of real hope for economic growth, and the numbers in this report are expected to slow down a bit to confirm the weaknesses seen in other sections. The expected weakness is supposed to put slight pressure on the US dollar.
2- US CB Consumer Confidence - Tuesday
With increasing inflation and continuing geopolitical concerns, consumer confidence and expected index are expected to fall in May, respectively, to their 16 months and nine-year low. Since, in the current situation, lower numbers mean that inflation will not increase more sharply, in incredible sound, estimated weaker numbers could help the stock markets to pause bears or even increase.
3- ECB Forum on Central Banking - Wednesday
The ECB Forum on Central Banking is an annual event organized by the European Central Bank in Sintra, Portugal. It will be very important this week for market participants, as BoE Gov Bailey, Fed Chair Powell, and ECB President Lagarde are due to participate in a panel discussion called "Policy panel." This meeting should give us a brighter idea of what central bankers are thinking about the global economy.
4- US Personal Income & Spending - Thursday
Different factors tell us we should not be optimistic about estimated spending data. Retail sales fell in May for the first time in 6 months, and consumer sentiment slid to an 11-year low, while inflation is still high. Therefore expecting positive numbers is a bit unrealistic. On the other hand, we expect a 0.1% decline in real disposable personal income (RDPI) after the May inflation increase. Both estimated numbers are worrying and would not help the US stock market sentiment.
5- China PMIs - Thursday
With lifting the Covid-19 restrictions, PMI numbers are expected to increase and show the Chinese economy could be headed toward a more normal growth trajectory in the second half of this year. Expected numbers are supposed to help the Yuan become stronger against its rivals. It also can help the global economic sentiment as it can help solve some supply chain disruptions. More importantly, the services PMI is expected to rise from 47.8 in May to 50.1 in June to show that, in line with manufacturing activities, the service sector can also help the GDP growth.
6- Eurozone inflation - Friday
Since Gas and Oil prices have been printing new records in June, price pressures can continue in Eurozone to push the European central bank to act faster against inflation, otherwise, it could be late. After increasing inflation in May by 8.1%, we expect to see even more increase in June by 8.3%. With estimated numbers, we expect the ECB to begin the rate hike cycle at its July monetary policy meeting, with at least a 25 bps increase in its Deposit Rates, which are supposed to be positive for the common currency.