Market Movers
We kick off with final PMI manufacturing data for the euro area. The most interesting new information are the first estimates for Spain and Italy. Overall euro-area PMI is expected to be unchanged from the flash estimate at 52.3. UK PMI is also due and is expected to increase to 52.5 in May after a large drop in April.
German CPI for May starts with Länder CPI throughout the morning. The total harmonised number is due for release at 14:30 CET. We expect the increase in harmonised CPI to accelerate to 0.6% y/y from 0.3% y/y in April.
US core PCE is expected to rise 0.2% m/m leaving the annual core PCE inflation unchanged at 1.3%. More important though, will be the US ISM index for May, as the main box that the Fed has left to tick before hiking is a rebound in economic activity. Especially the new orders index is important as this is the most leading part of the overall index. We look for a small rise in ISM to 51.7 (consensus 52.0) from 51.5 and if this reflects a rise in the new orders index it would be the second increase in a row of new orders. We expect to see a gradual increase in US activity in Q2 and Q3, paving the way for a rate hike in September.
The rest of the week focus will be on the ECB meeting Wednesday and US non-farm payrolls Friday. Negotiations between Greece and EU will also be in the limelight as the real deadline on 19 June draws closer.
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