The week ended with an employment report from the U.S. Department of Labor that was generally positive for U.S. dollar-denominated asset classes. The data was good as it could be without calling into question the near-consensus opinion that the Fed will abstain from raising rates until early autumn. As had been widely anticipated, one shadow cast by the report was the decline in energy sector jobs for the month – hardly a surprise after last week’s weekly energy oil inventory report from the Energy Information Administration registered a significant drop. With the glass-half-full argument appearing to be winning in the U.S. and a victory for Conservatives in the U.K. that bolstered market confidence there, the focus of risk narratives in the week ahead are likely to be possible fresh stimulus measures in China after abysmal trade data and the deadline this coming Tuesday for Greece to meet its next €750 million ($840 million) loan repayment to the International Monetary Fund.
Monday, May 11: The People’s Bank of China releases critical April money supply and new loan data from the People’s Bank of China. After the disappointing trade figures announced last week, there is renewed speculation that the PBOC may act again to reduce reserve ratios to increase lending, particularly targeted at small and mid-sized companies. In Europe, wholesale prices for April in Germany will take a back seat to the Bank of England’s interest rate announcement. With the Tories’ election victory in Parliament on Thursday, a U.K. referendum on European Union membership is more likely, potentially complicating the decision-making process for the country’s central bank policymakers.
Tuesday, May 12: March industrial output data will be released in the U.K., with consensus forecasts for a slight moderation in manufacturing-specific levels that will not prevent expansion of overall industrial production. Bond investors will be watching a speech in New York by Federal Open Market Committee member John Williams, who succeeded Fed Chair Janet Yellen as President of the Federal Reserve Bank of San Francisco, for any signs of a hawkish shift in language. As earnings season rolls into the final stretch, a number of key releases are on the calendar. Internet registry service GoDaddy will make its first quarterly announcement as a public company on Tuesday. The company recently announced that it would cease NASCAR sponsorship activities at the end of the 2015 season. German stalwarts Allianz and Deutsche Post will also be reporting results for the first three months of 2015. The Total Return Fund of Allianz division PIMCO was recently surpassed as the world’s largest bond fund by Vanguard’s Total Bond Market Index as investors continue to depart after the loss of portfolio manager Bill Gross.
Wednesday, May 13: China’s National Bureau of Statistics will release April industrial production, fixed-investment and retail sales data. After the recent setbacks in trade and industrial activity data, equity markets might take any weakness as “bad news is good,” as investors are increasingly count on central bank intervention to help the broad economy reach the government’s 7 percent GDP goal. First-quarter GDP for France, Germany and the euro zone in aggregate will be the data releases in Europe most likely to impact market sentiment. Consumer inflation levels for April will also be released for France and Germany, as will March industrial production for the 19-nation common currency region. U.K. claimant count data will be released ahead of the Bank of England quarterly inflation report and speech by governor Mark Carney. April retail sales will be the big economic story for U.S. markets, as investors try to gauge the mood of the consumer during the employment upswing. EIA oil stockpile levels will be a focus for energy markets after last week’s unexpected contraction. After several weeks of volatile trading, fast-casual restaurant chain Shake Shack will report first-quarter earnings.
Thursday: May 14: April money supply data from the Bank of Japan and machine tool orders, often a leading indicator for overall production, from the Japan Machine Tool Builders’ Association, will put Abenomics under the microscope. The U.S. will have a slew of important economic data announcements. After initial claims reached a 15-year low last week, followed by a rebound in payrolls for April, expectations are for continued improvement in the headcount for the newly jobless. Producer price index levels for April will also be released with expectations for marginal expansion, as some commodity prices stabilized over the month. U.K. football stalwart Manchester United, will announce fiscal third-quarter results on Thursday. Also reporting for the first three months of the year is London–headquartered Euromoney Institutional Investor, the parent company of Institutional Investor.
Friday, May 15: Bank of Japan governor Haruhiko Kuroda will hold a press conference on Friday to discuss monetary policy with media questions likely to center on the perceived effectiveness of the central bank’s unprecedented easing program to-date. In Europe, euro zone April trade data will be the primary economic release of the day. On deck in the U.S. are industrial production for April and University of Michigan initial consumer confidence levels for May. The U.S. Treasury Department will release March Treasury International Capital flow data, providing insight into international appetite for U.S. Treasuries in light of dollar fluctuations. Singapore–based commodity trader Olam International will release fiscal third-quarter results on Friday. Olam CEO Sunny Verghese raised a few eyebrows last week, despite the fact that in 2012 Olam itself was a target of Muddy Waters, a short-selling research firm headed by Carson Block.