*Updated 11 May 2021 with US Treasury issuance for the week. The focus this week will be on US inflation, consumer spending, and industrial output. US Fed Governors will also be active with several speeches throughout the week.
Last week, the key US payrolls report disappointed. While non-farm payroll growth was substantially lower than expected, the household survey did include a lift in the participation rate for Apr. This was positive, highlighting workers returning to the labour market. The US manufacturing and services ISM’s indicated that growth remained strong in Apr. The prices indexes across both reports revealed that firms continued to experience rising input prices. The growing proportion of firms experiencing higher input prices suggests that rising prices have been persistent month to month (rather than just as a ‘one-off’).
This week, the focus will be on the US CPI and PPI reports for Apr. There will be a base effect in the headline numbers. Annual CPI growth is expected to be +3.6% (versus +2.6% in Mar). The annual PPI growth is expected to be +5.9% (compared to +4.2% in Mar). Other countries to report CPI this week include Germany and China.
US retail sales will also be released this week. The expectations are for +0.2% growth in Apr (after a +9.7% growth in Mar). It is possible that spending remained higher in Apr – last week motor vehicle sales for Apr hit 19m (SAAR). This was the highest level of sales since before the GFC.
US industrial production will also be released this week – which includes industrial capacity utilization estimates. Production is expected to have expanded by +1.1% in Apr (compared to +1.4% in Mar).
Also out for the US: University of Michigan Consumer Sentiment (prelim) for May and JOLTS for Mar. While initial claims continue to fall, the level of continuing claims remains stubbornly high (the total number of people across State and Fed programs is still 16.2m people at 17 Apr).
The minutes of the ECB policy meeting will be released this week.
The focus in Australia will be on the Federal Government Budget for 2021/22. The budget is expected to reverse the pre-pandemic stance on “budget repair” and austerity. The Wage Price Index for Q1 will also be a key report this week.
Details of QE purchase operations are incomplete as the new schedule will be released later in the week.
This week, the US Treasury will auction $266bn in ST Bills with a net paydown of $39bn. The net paydown for the quarter to date is now -$4bn. The US Treasury will auction the 3yr Note, 10yr Note, and 30yr Bond this week (raising approx. $78bn in new money, to settle next week). Approx. $84bn in ST Bills, Notes, and Bonds will mature on the Fed balance sheet and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
