While investors attempt to predict the impact of shifting political currents on public policy, monetary policy remains locked in a trend as a global experiment in low and negative interest rates continues. Critical economic data points from the U.S., Japan and primary developing economies this coming week will provide insight into the effectiveness of extraordinary policy and how much parallel political reform is required.
Monday, May 16: The U.S. Treasury Department releases total net March Treasury International Capital Flows. In February long-term purchases of Treasuries rose by more than $70 billion, a rebound as the U.S. dollar strengthened despite expectations for Federal Reserve rate hikes. The data will also be carefully watched for any signal that Chinas policymakers are adjusting exposure to the dollar.
Tuesday, May 17: Japans Ministry of Economy, Trade and Industry announces industrial production for March. Despite negative interest rates and a massive quantitative easing program overseen by the Bank of Japan, global markets remain skeptical that the nation can revive growth through monetary policy alone. In a speech before parliament on Tuesday, Finance minister Taro Aso pledged that the government would intervene if currency appreciation extends.
Wednesday, May 18: Chinas National Bureau of Statistics releases housing index levels for April. After the Peoples Bank of China has taken steps to support the property markets in recent quarters, the turnaround in primary cities has been pronounced, particularly in coastal areas. In March prices in Shanghai were 65 percent higher year-over-year while in Shenzhen, the price of a new home was up by 80 percent.
Thursday, May 19: Swiss private bank Julius Baer Group will report financial results. The bank made headlines this past week after former employee Jorge Arzuaga was revealed as a cooperating witness in the ongoing investigation into bribery within the Fédération Internationale de Football Association, the World Cups governing body. Seven other banks have been implicated by European and U.S. prosecutors.
Friday, May 20: Instituto Brasileiro de Geografia e Estatistica releases consumer inflation levels. After climbing by 0.61 percent in April, concerns over inflation amid high unemployment are feeding into the political unrest in Brazil. Interim President Michel Temer, who took the helm on Thursday, is already drawing criticism for his cabinet, which includes only men of European descent: among them a Creationist evangelist minister who was first tapped as science minister, then appointed trade minister, and as minister of agriculture, a soybean farmer who has lobbied to cull swaths of the Amazon for crop and livestock raising.
Saturday, May 21: The Mawazine music festival in Morocco will stretch across eight days in the capital city of Rabat. With more than 2 million people in attendance, the festival crowd dwarfs the host citys population. International stars appearing at this years festival include Iggy Azalea, Pitbull and Wyclef Jean.