Key Events And Issues In The Week Ahead

In the US, retail sales are expected to continue to slow in the headline, while retail sales ex autos, building materials, and gas should turn positive in April according to Wall Street analysts. Goldman remains below consensus for Thursday's Philadelphia Fed survey, forecasting a slight improvement on the previous month. The firm also expects the flash reading for Euro area Q1 GDP to come in slightly below consensus, consistent with a shallow contraction. We forecast German GDP will turn positive in Q1 after Q4 2012's negative reading. In Japan, GS sees Q1 GDP at 2.8% qoq ann., slightly above consensus, with stronger consumer spending the main driver. Among the central bank meetings this week, Russia, Chile, and Indonesia are expected to remain on hold, in line with consensus.

Monday 13th May

  • US Retail Sales (Apr): Consensus: -0.3%, Previous: -0.4%
  • Eurogroup Meeting
  • Also interesting: Australia Housing Finance, Australia NAB Business Survey


Tuesday 14th May

  • Euro area Industrial Production (Mar): Consensus: 0.4% mom, Previous: 0.4%
  • Germany CPI (Apr Final): Previous: 1.1% yoy (Flash)
  • ECOFIN Meeting
  • India WPI (Apr): Consensus: 5.5%, Previous: 6.0%
  • Indonesia CB Meeting: policy rate expected to remain at 5.75%
  • Also interesting: RICS Housing Market Survey, Sweden CPIF, Hungary CPI, Israel CPI, NZ Retail Sales

Wednesday 15th May

  • US Empire Survey (May): Consensus: 4.0, Previous: 3.0
  • US TIC Data (Mar)
  • US Industrial Production (Apr): Consensus: -0.2%, Previous: 0.4%
  • Euro area GDP (Q1): Consensus: -0.1%, Previous: -0.6%
  • Germany GDP (Q1): Consensus: 0.3%, Previous: -0.6%
  • UK Unemployment Rate: Consensus: 7.9%, Previous: 7.9%
  • Bank of England Inflation Report
  • Also interesting: US Homebuilders' Survey, France GDP, Italy GDP, Australia Wage Price Index, Brazil Retail Sales, Czech GDP, Hungary GDP, Poland CPI

Thursday 16th May

  • US CPI (Apr): Consensus: -0.2%, Previous: -0.2%
  • US Housing Starts (Apr): Consensus: -5.4%, Previous: 7.0%
  • US Philadelphia Fed Survey (May): Consensus: 2.8, Previous: 1.3
  • Euro area CPI (Apr Final): Previous: 1.2% yoy (Flash)
  • Japan GDP (Q1): Consensus: 2.7%, Previous: 0.2%
  • Turkey MPC Meeting: CBRT is expected to cut the borrowing rate by 25bps to 3.75% and also hike the Reserve Option Coefficient (ROC) more aggressively, by as much as 30-40bps. Risks are to the downside.
  • Chile MPC meeting: MPC is expected to leave the policy rate unchanged at 5.00%, with the possibility of a more dovish statement.
  • Brazil IGP-10 Inflation (May): Previous: 0.18%
  • Also interesting: US Initial Claims, Norway GDP, Israel GDP, NZ Government Budget


Friday 17th May

  • US U Michigan Consumer Sentiment (May): Consensus: 77.5, Previous: 76.4
  • Japan Machinery Orders (Mar): Consensus: 2.8%, Previous: 7.5%
  • Mexico GDP (Q1): Consensus: 1.1%, Previous: 3.2%

All of the above in chart format via SocGen:

Key Issues for the week ahead:



Since the release of our Global Economic Outlook in March, in which we forecasted a GDP contraction of 0.6% in the euro area this year,  most forecasters have come around to a similar view. Since then, survey data have continued downward, raising concerns that also Germany would be dragged into recession later this year. Last week’s strong hard data in Germany however provided some hope, and this week we expect euro area GDP growth to be confirmed at around -0.1% qoq, in line with our March forecast. While a relatively strong rebound is still expected in Germany (0.4% qoq), GDP is expected to continue to contracting in France (-0.2%), Italy (-0.3%) and Spain (-0.5%).

MARKET ISSUES: While expectations of more ECB action have been building, a stronger outlook in Germany is likely to ease pressures on  the ECB to act in the short-term. However, the headwinds from continued fiscal adjustments (in Spain and France) and the need for more structural reform (in particular in Italy), imply very subdued growth and inflation outlooks well into 2014.


Abenomics has brought a weaker yen, breaking through 100 last week, stronger equity market gains and an emergency stimulus package, all of which will boost economic growth. Indeed, high frequency indicators for Q1 strongly suggest that economic activity has picked up. In that quarter, the boost is likely to have come exclusively from domestic demand with net exports likely to have had a small negative impact. GDP should jump by 0.8% qoq after a flat reading in Q4.

MARKET ISSUES: The latest move in the yen will add to the already strong expectation that net exports will soon make a significant contribution to growth. Markets will wonder how much further that yen move can go. At the weekend, G7 ministers concluded their meeting without any official statement, but press reports around the event suggest no significant criticism was raised against Japan.


The Census Bureau’s advance report on April retail sales will provide an important first piece of the US Q2 growth puzzle. In contrast to the improvement in labour market conditions witnessed in April, headline purchases probably slumped further, contracting by another 0.6% after the 0.4% decline posted in March. Despite the projected disappointing April results, solid momentum heading out of the winter quarter  implies that our current Q2 real PCE forecast remains on track.

MARKET ISSUES: The markets worry that the sequester might be damaging growth and weak sales readings might add further fuel to those concerns


The Bank of England Inflation Report press conference on Wednesday will be one of the last big set-piece occasions for the Governor to present his policy views before he retires from the Bank at the end of June. With no policy action to explain from the May meeting, attention may turn to the longer term performance of the Bank vis a vis its remit and the changes of style and substance that are likely to occur when Mr Carney takes over the helm in July.

MARKET ISSUES: The markets will want to know if the themes of the March and April MPC minutes continued to exercise the minds of the MPC. Namely, does the Committee still fear that further easing might be misinterpreted as a weakening of the Bank’s anti-inflation resolve?

Source: Goldman and SocGen