Macroeconomics: The Week Ahead: 7 to 11 June 2021

Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist

The new week kicks off with China’s trade data, with inflation and credit aggregates also due, the US has CPI, Trade Balance along with NFIB Small Business Optimism and Michigan surveys, while the UK looks to monthly GDP and the accompanying run of business activity data and BRC Retail Sales, German has Orders, Production and Trade, Japan awaits final Q1 GDP, Economy Watchers survey and BSI survey. While the below par US labour data gives the Fed some vindication in sticking with its patience narrative, US CPI will still need to be no worse than the expected 0.4% m/m on both headline and core that would bump y/y rates up to 4.7% headline and 3.4% core. China’s CPI is expected to rise quite sharply, but at 1.6% y/y vs. April 0.9% (thanks in no small part to base effects), it will remain well below the govt target of 3.0%; but the focus will be on PPI which is expected to jump to a 13-yr high of 8.9% y/y (from 6.8%).

The ECB and BoC hold policy meetings, with neither expected to change rates or QE volumes, but the policy messages will continue to diverge, with the BoC likely to hint strongly that it will likely taper its weekly QE volume (current C$3.0 Bln) at its July meeting. By contrast, the ECB will doubtless stick to a dovish line, with a fresh set of forecasts likely to see CPI still some way off its just below 2.0% target on a 3-yr time horizon, per se offering justification for this stance. But with hawks and doves again rather far apart, the question is whether it takes a leaf out of the BoE’s playbook, with a ‘technical’ move to reduce its monthly PEPP purchase volumes modestly, predicated on lower summer issuance.

Politically, following hot on the heels of the G7 Finance Ministers that agreed on a minimum 15% corporate tax rate, there is a G7 leaders meeting to end the week. Iran nuclear talks aimed at reviving the JCPOA will resume. Germany’s CDU/CSU will be looking to capitalize on a sharp improvement in the CDU’s vote share in the Sachsen Anhalt state election, while investors anxiously await the outcome of Peru’s presidential election.

A very busy week in the commodities space has OPEC, EIA and IEA oil market reports, China CASDE and USDA WASDE grain and soybean monthly supply and demand reports, as well as the ABARES quarterly Australian crop  and Malaysia’s Palm Oil Board reports. On the conference side of the equation, there is the week long Commodity Trading Week (at which a number of ADM ISI and ADM staff will be speaking) along with International Grains Council Conference. There are also the UBS Global Industrials and Transportation, RBC Global Energy & Power Executive & Deutsche Global Basic Materials conferences.

It will be a very modest week for corporate earnings, with Bloomberg News highlights the following as likely to be among the headline makers: Auto Trader, Brown-Forman, pet supplies e-retailer Chewy, CMC Markets, Spain’s Industria de Diseno Textil, Marvell Technology, software provider UiPath, Vail Resorts, Mitie Group, Central Bank of India, Campbell Soup, Dollarama and Japan’s Sekisui House. By contrast it will be a busy week for government bond issuance with the US heading the list with USD 120 Bln of 3, 10 & 30-yr, there are 5 & 50-yr conventional and 9-yr Index-linked auctions in the UK, while a busy week in the Eurozone has sales in   Germany. Italy, Austria, Netherlands & Portugal.

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Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

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