There were no significant UK developments on Monday with narrow ranges prevailing, especially as there was a lack of major global events. The UK PMI data will be released on Tuesday. Market expectations are for little overall change in the data with a slight contraction in manufacturing activity and a slightly slower rate of increase in the services sector. Markets will also be monitoring the testimony from Bank of England Governor Bailey and other Monetary Policy committee members who are due to testify at the Treasury Select Committee. In particular, traders will be looking for any hints on the policy stance over the next few months. UK government borrowing increased to £25.6bn for April from £13.7bn the previous year with a further increase in debt interest payments and higher welfare payments.
Key Data
9.30 S&P Global/CIPS Services PMI (May) Exp. 55.5 Prev. 55.9
10.15 Bank of England Monetary Policy Hearings
The Euro edged higher after Monday’s European open, although overall ranges were limited with the Euro advance held against the dollar. According to provisional data, Euro-Zone consumer confidence improved only marginally to –17.4 for May from –17.5 previously but weaker than consensus forecasts of –17.0. Although this was the strongest reading for 15 months, the data maintained reservations surrounding the growth outlook. The latest Euro-Zone PMI business confidence data will be released on Tuesday. Consensus forecasts are for the manufacturing sector to remain in contraction with only a slight improvement from April while the rate of growth is expected to slow very slightly on the month.
Key Data
8.30 German HCOB Composite PMI (May) Exp. 53.5 Prev. 54.2
8.30 German HCOB Manufacturing PMI (May) Exp. 45 Prev. 44.5
9.00 HCOB Composite PMI (May) Exp. 53.7 Prev. 54.1
Minneapolis Fed President Kashkari stated that it was a close call whether interest rates should be increased again at the June policy meeting. He added that there was no evidence that banking-sector stresses are doing the Fed’s job on inflation and he warned that was possible that rates might need to increase to at least 6.0%. St Louis head Bullard stated that the Fed will have to increase rates further, potentially by a further 50 basis points. He added that the previous projection of rates just above 5.00% was based on expectations of weaker growth and inflation improvements that have not been seen. Ahead of a planned meeting with President Biden, House Speaker McCarthy stated that he was not positive over negotiations. After the talks both sides stated that there had been progress, but there was no deal apart from an agreement to avoid a debt default. Negotiations will continue between staffers while Treasury Secretary Yellen reiterated that there was a hard deadline on June 1st to avoid default.
No Key Data