Week Ahead – May 29th

US debt deal negotiations have entered the final stage, but it is likely that last-minute changes will continue to take place until the June 1st deadline. On the data front, investors are expected to closely follow the US labor report, JOLTS job openings, ISM Manufacturing PMI, and CB consumer confidence. Additionally, inflation rates are anticipated for the Euro Area, Germany, France, Italy, Spain, and South Korea. Q2 GDP growth rates will be released for Canada, India, Brazil, and Turkey, along with manufacturing PMIs for China, Italy, Spain, Canada, Russia, India, and South Korea.

The US debt-ceiling negotiations continue to take center stage as the June 1st deadline set by the Treasury Department is approaching. Encouragingly, on Friday, the White House and congressional negotiators made progress toward a compromise agreement to raise the debt ceiling for a two-year period. The two sides were only $70 billion apart on a total discretionary spending figure of over $1 trillion. In the coming week, market participants will eagerly await the US labour market report, which will provide insights into the health of the jobs market ahead of the Federal Reserve’s June meeting. The US economy is expected to add 193,000 jobs in May, indicating a slowdown from the 253,000 jobs reported in April, while the jobless rate is set to rise slightly to 3.5%. Moreover, several important indicators, including April’s job openings and the ADP employment change for May, are due for publishing. Apart from that, the ISM Manufacturing PMI, S&P/Case-Shiller home prices, and regional activity indexes such as the Chicago PMI and the Dallas Fed Manufacturing Index will give further clues about the state of the economy. The final S&P Global Manufacturing PMI and first-quarter labor productivity readings will also come to attention.

Outside the United States, updated GDP figures from Canada and Brazil will be closely watched, along with Canada’s current account data, Brazil’s foreign trade figures, jobless rate, industrial output, and Mexico’s unemployment rate. Manufacturing PMI data from across the region will be monitored for any effect on the broader economic landscape.

In Europe, minutes from the ECB’s last monetary policy and flash CPI reports for the Eurozone, including Germany, France, Italy, and Spain, take the spotlight. The annual inflation rate in the Euro Area is anticipated to ease further to a 15-month low of 6.3% in May, compared to 7% in April. Additionally, retail sales in Germany are likely to rebound after three straight months of declines. Jobless data will also be revealed for the Euro Area, Germany, Spain, and Italy. Business surveys for the Euro Area will be published, along with first-quarter GDP updates for France, Italy, Switzerland, and Turkey. Finally, investors will keep an eye on the Euro Area business survey and final manufacturing PMIs, as well as the United Kingdom’s final manufacturing PMI, Nationwide housing prices, and the Bank of England’s monetary indicators.

In China, official NBS PMIs and the Caixin manufacturing PMI will provide an update on the economic recovery in May. In Japan, a batch of economic data, including retail sales, industrial production, consumer confidence, unemployment rate, housing starts, and final manufacturing PMI will be divulged. In India, GDP growth figures for Q1 will probably show an annual expansion of 5%, above 4.4% in Q4 2022, boosted by services exports, private consumption, and manufacturing amid easing input cost pressures. In Australia, the Monthly CPI Indicator is likely to show price pressures remained elevated in May. Other significant data covers building permits, home loans, private capital expenditure, construction work done, and private sector credit. Elsewhere in the Asia-Pacific region, the Bank of Thailand is set to raise interest rates by another 25bps. It will also be interesting to follow trade data from Thailand, Hong Kong, and South Korea; several manufacturing PMIs for the Philippines, Malaysia, Taiwan, and Vietnam; inflation rate and final GDP numbers for South Korea.