18 Jun 2018
Up this week
After the FOMC and ECB meetings of last week, it is the Bank of England’s turn this Thursday, we expect the majority of the Monetary Policy Committee (MPC) to vote for no change to rates.
While there won’t be a press conference, Governor Mark Carney will deliver his annual Mansion House speech later that evening. We will publish our full MPC preview in the coming days. It is set to be quiet on the data front, with the main release being public sector finances on Thursday. Of course, Chancellor Philip Hammond will speak later on at the same banquet. Meanwhile, the British political ping-pong over the EU Withdrawal Bill is set to continue with the Lords considering the Commons’ amendments on Monday before discussion returns to the lower house on Wednesday. At this stage it is not clear how the toing and froing on the ‘meaningful vote’ amendment will play out.
Europe this week
In the Eurozone, ECB President Mario Draghi is set to give the opening remarks at the ECB’s annual Sintra conference later today and will speak again tomorrow. Ahead of the much anticipated June 28/29 EU summit, there is set to be meetings of both Eurogroup (Thursday) and ECOFIN (Friday). In terms of data, Friday sees the release of the flash PMIs as well as revised French Q1 GDP, while the preliminary Euro area consumer confidence will be published on Wednesday.
US and the ROTW this week
Stateside releases include the NAHB index on Monday and the Philadelphia Fed manufacturing survey on Thursday, with flash PMIs rounding off the week on Friday. Do also note that Fed Chair Jerome Powell is set to join Draghi in Portugal on Wednesday for a joint speech. Asia markets will be a little quieter on Monday given the national holiday in China. Subsequently the focus is likely to centre on Japanese CPI and flash PMIs on the Friday. If we see the US push ahead with raising tariffs against China, we can perhaps expect risk-off sentiment to prevail this week in Asia, particularly if Beijing responds in a tit-for-tat manner.
Geopolitics raises pressure in oil markets
Oil markets were on the back-foot on Friday and the losses have continued throughout the Asian session today. As it stands the Brent front month is down over 1% whilst the WTI front month has shed just over 2%. This is largely due to the brewing China-US trade war where risk-off sentiment has supported the USD, however the far bigger issue is the threat of Chinese tariffs on US crude following Washington’s slap of tariffs of $50bn worth of Chinese imports. The Chinese have responded by stating that they will begin slapping tariffs on US export goods which include US crude and associated products. China is currently the largest customer of US crude - Reuters report that China currently imports about 363,000 barrels of U.S. crude daily, on par with Canada as the biggest U.S. crude importer, according to U.S. Energy Department figures.
13.45 US Fed’s Dudley speaks
18.00 US Fed’s Bostic speaks