Financial markets review – 20th May 2016

Monday 16 May

• In the US the NAHB Housing Market Index in May was in line with market expectations at 58 (versus 59).
• Japan MoM PPI for April showed more deflationary pressure at -0.3%, compared to expectations at 0.2%.

Tuesday 17 May

• Japan’s Q1 GDP printed at +0.4% QoQ beating expectations of +0.1% growth, this meant the annualised pace has been lifted to +1.7% QoQ.
• China’s latest housing price data show that in April new house prices increased in 65 of the 70 cities tracked, the most since December 2013.
• Headline CPI in the US printed at +0.4% MoM in April, slightly ahead of expectations (+0.3% expected). That had the effect of lifting the YoY rate to +1.1%. Meanwhile the core print of +0.2% matched estimates, although it did cause the YoY rate to edge down to +2.1%. Industrial production also increased more than expected in April (+0.7% MoM vs. +0.3% expected). The April housing starts data showed a +6.6% MoM gain in sales (vs. +3.3% expected).
• In the UK the April CPI rose less than expected last month (+0.1% MoM vs. +0.3% expected).

Wednesday 18 May

• The April headline CPI reading for the Euro area was 0.0% MoM meaning the YoY rate was confirmed at -0.2%. In the UK, the ILO unemployment rate was unchanged in March as expected at 5.1%.
• FOMC April meeting minutes were released and revealed that many Fed officials will be in favour of raising interest rates in the June meeting if the economic condition permits.

Thursday 19 May

• In the US initial jobless claims declined by 16k to 278k. The Philly Fed manufacturing survey print declined another 0.2pts to -1.8 after expectations had been for a rebound to +3.0, new orders, shipments, employment and inventories all remained in contractionary territory.
• The UK showed positive retail sales data, the figure excluding fuel sales had a +1.5% rise MoM last month, far exceeding the +0.6% expectation and resulting in the YoY rate moving up to +4.2% from +2.6%.
• The latest ECB minutes revealed that there was a ‘broad agreement’ that ‘patience was needed for the measures to fully unfold over time in terms of output and inflation’.

Friday 20 May

• In Europe, Germany’s April PPI showed a MoM change of 0.1% compare to 0.2%, broadly in line with expectations. This translated into a YoY change of -3.1% versus -3.0 forecast.
• Canada released the latest CPI (MoM in April) which came in at 0.2%, beating expectations of 0.1%, meanwhile the MoM retail sales changes declined by -0.3%, this was marginally better than the expectation of -0.4%.
• In the US the existing home sales in April beat expectations at 5.45m compared to a forecast of 5.40m, this was a 1.7% gain over the previous month.