The heavy economic data week begins with Retail Sales, expected to come negative, a drop from April, and PPI, expected to post another solid gain in the past month. In the meantime NFIB small business optimism declined in May, as expected.
Already released this morning, the May NFIB index showed a small decline to 90.9 from 91.2 previously, in line with expectations.
8:30: Retail sales (May): Weak vehicle sales. Weak auto sales—caused in part by supply-chain problems in the auto sector—point to a decline in total retail sales for May. We also look for flat non-auto sales growth due to weaker-than-expected chain store sales and a decline in gas prices.
On total sales: median forecast (of 81): -0.5%; last: +0.5%.
On sales ex autos: median forecast (of 73): +0.2%; last +0.6%.
8:30: Producer Price Index (May): Further gains. Goldman forecasts an increase of 0.1% (mom) in the total PPI and 0.2% in the core. Higher-than-expected import prices for May—reported last week—suggest possible upside risk to these forecasts.
On headline: median forecast (of 76): +1.0%; last +1.6%.
On core: median forecast (of 71): +0.2%, last +0.2%.
10:00: Business inventories (April). Not a market mover, but the non-auto retail inventory component could have an impact on the “bean-count” estimate of Q2 GDP. Today’s release also includes annual revisions to business inventories.
Median forecast (of 50): +0.9%; last +1.0%.
11:00: Fed buys $2.5-$3.5 billion in 12/15/2012 - 11/30/2013 bonds
14:30: Federal Reserve Chairman Ben Bernanke on fiscal sustainability. No Q&A. Bernanke will probably stay away from the topic of monetary policy. Instead, he will reiterate the need for a credible plan to reduce long-term problems the government's debt. He probably will also warn against making the increase of the statutory debt limit a political issue, and of the dire consequences of markets losing confidence in the safety and soundness of US securities.
From GS, SMRA and ZH