While every trader is tansfixed on this Thursday's Brexit referendum outcome, dubbed the year's biggest risk event (at least so far), there is a full docket of economic events in store.
Following on from a frantic last week, it’s a quiet start to proceedings today with the latest German PPI print the only data of note on either side of the Atlantic, as DB's Jim Reid recaps.
Tuesday is a little busier for data with the German ZEW survey for June expected to show a modest increase, while UK public sector net borrowing data for May is also due to be released. Again, there’s no data due out in the US.
The economic data of note on Wednesday comes in the afternoon where we will get the June consumer confidence reading for the Euro area as well as US existing home sales data and the FHFA house price index. China will also release its May leading economic index.
The data calendar finally kicks into gear on Thursday. During the Asia session we’ll get the leading index out of Japan along with the Nikkei manufacturing PMI. During the European session meanwhile we’ll get the flash services, manufacturing and composite June PMI’s for the Euro area, Germany and France. Little change is expected for the Euro area. Also due out on Thursday morning will be French confidence indicators. Over in the US meanwhile we’ll get a random splattering of data including the Chicago Fed national activity index, initial jobless claims, flash manufacturing PMI, new home sales, leading index and Kansas City Fed’s manufacturing survey.
We close out the week on Friday in Europe with the final revision to the Q1 GDP report for France and German IFO survey for June. Meanwhile in the US we finish the week with the first take of the May durable and capital goods orders data, as well as the final June reading for the University of Michigan consumer sentiment survey.
Of course, as noted above, the big event next week however is away from the data and of course reserved for Thursday with the UK EU referendum vote. In the lead up there are various TV debates scheduled each evening. As well as that, we will also hear from Fed Chair Yellen this week when she is set to address the Senate on Tuesday (3.00pm BST) and House Financial Services Policy on Wednesday (3.00pm BST) as part of her semi-annual monetary policy report. We’re also due to get comments from Kashkari today, Powell on Wednesday and Kaplan on Friday. Over at the ECB we’ll hear from Mersch today while a business conference sponsored by the German CDU party tomorrow will see Merkel, Schaeuble and Dijsselbloem all make comments. If all that wasn’t enough, next weekend on Sunday is of course also the Spanish General Election.
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Here is JPM's take of this week's key catalysts:
UK referendum – the voting takes place Thurs June 23. Vote counting will commence once the polls close at 22:00 GMT Thurs night (6pmET). Local districts will announce their voting results as they come in. It is assumed that by early in the morning Fri the final count will be known (late Thurs night in the US).
Fri June 24 – this will be a very volatile and busy session w/the UK referendum results published while the Russell 1K and 2K get reconstituted.
Yellen Congressional testimony – she will appear before the Senate (Tues 6/21) and House (Wed 6/22) although this likely won’t be particularly incremental (she just gave the post-FOMC meeting press conf. on 6/15 and spoke in Philadelphia back on 6/6).
ECB TLTRO – demand at the new TLTRO II from the ECB (Wed June 22) is expected to be tepid according to a recent Reuters preview article (http://goo.gl/SQLs3d). Prior TLTRO loans will likely be rolled over but new incremental demand will probably only be “a few tens of billions of euros”.
US bank stress tests – the first part of the US bank stress tests (the “DFAST”) will be published Thurs June 23 (the CCAR results will get released Wed June 29). Obviously this process is an important one for banks but lately the group is trading more on rates and
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Summarizing the events in tabular format:
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We concludes with Goldman's summary of just the key US events
Monday, June 20
- 12:15 PM Minneapolis Fed President Neel Kashkari (FOMC non-voter) speaks: Federal Reserve Bank of Minneapolis President Kashkari will be giving introductory remarks and chairing a panel on too big to fail, titled “Shortfalls of current policies towards banks” in Washington.
Tuesday, June 21
- 10:00 AM Fed Chair Yellen appears before the Senate Banking Committee: Federal Reserve Chair Janet Yellen will appear before the Senate Banking Committee to deliver the Fed’s semi-annual Monetary Policy Report to Congress and answer questions from lawmakers. We expect her testimony to be in line with the June FOMC statement and the post-meeting press conference.
- 6:30 PM Fed Governor Jerome Powell (FOMC voter) speaks: Fed Governor Powell will be making opening remarks at a roundtable discussion on the Interim Report of Alternative Reference Rates Committee at the Federal Reserve Bank of New York. Prior to the May payrolls report, Powell had remarked that another rate hike “fairly soon” may be appropriate, but the Fed should tighten at a gradual pace.
Wednesday, June 22
- 9:00 AM FHFA house price index, April (consensus +0.6%, last 0.7%): Consensus expects a 0.6% gain in the FHFA house price index in January, which has risen 6.1% over the past year. The FHFA house price index has a wider geographic coverage than the S&P/Case-Shiller housing price index, but is based only on properties financed with conforming mortgages.
- 10:00 AM Fed Chair Yellen appears before the House Financial Services Committee: Federal Reserve Chair Janet Yellen will appear before the House Financial Services Committee in the second day of testimony to deliver the Fed’s semi-annual Monetary Policy Report to Congress and answer questions from lawmakers.
- 10:00 AM Existing home sales, May (consensus +1.8%, last +1.7%): Existing home sales are expected to rise 1.8% in May, according to the consensus view. Existing home sales are an input into the brokers' commissions component of residential investment in the GDP report.
Thursday, June 23
- 08:30 AM Initial jobless claims, week ended June 18 (GS 255k, consensus 270k, last 277k):; Continuing jobless claims, week ended June 11 (consensus 2,144k, last 2,157k): We expect initial jobless claims to decline to 255k, near the post-crisis lows. Last week, initial claims rose to 277k, in large part due to increases in California.
- 09:45 AM Markit Flash US Manufacturing PMI, May final (consensus 50.8, last 50.7): Consensus expects the Markit manufacturing survey to rise slightly above its flash estimate. Most responses to the survey are received by the time of the preliminary release, and revisions in the final release tend to be minor. We find that the flash Markit PMI does contain some predictive power for the ISM.
- 10:00 AM New home sales, May (GS -9.5%, consensus -9.5%, last +16.6%): We expect new home sales to decline 9.5% in May, largely due to payback from a sharp 16.6% gain in April. New home sales are highly volatile on a month-to-month basis. Residential investment growth is tracking at 2.7% (qoq ar) in Q2, a bit slower than the pace in recent quarters.
- 10:00 AM Leading indicators, May (consensus +0.2%, last +0.6%)
- 7:00 PM Dallas Fed President Robert Kaplan (FOMC non-voter) speaks: Federal Reserve Bank of Dallas President Kaplan will be giving a speech at a Money Marketeers dinner in New York. Prior to the May payrolls report, Kaplan voiced his support for a rate increase in the “near future” provided data continues to show signs of progress.
Friday, June 24
- 08:30 AM Durable goods orders, May (GS +0.9%, consensus -0.4%, last +3.4%); Durable goods orders ex-transportation, May (GS +0.7%, consensus +0.1%, last +0.5%); Core capital goods orders, May (GS +1.3%, consensus +0.4%, last -0.6%); Core capital goods shipments, May (GS +0.1%, last +0.4%): We expect core durable goods orders and core capital goods orders to rise in May, following a mixed April report. Although the May industrial production and ISM manufacturing reports were a bit soft, most data overall still suggest a modest expansion in manufacturing. We also expect core capital goods shipments to be close to flat, on the back of a weaker print in the ISM manufacturing index’s production component. Over the last year, core capital goods orders declined by 4.4%, while core capital goods shipments declined by 4.75%.
- 10:00 AM University of Michigan consumer sentiment (final), June (GS 93.8, consensus 94.2, last 94.3): The Michigan consumer sentiment gauge edged down in the June preliminary estimate, but still remains near post-crisis highs. The focus of this report is likely to be on the 5- to 10-year ahead inflation expectations measure, which declined to an all-time low of 2.3% in the preliminary release.
Source: DB, JPM, BofA, GS