Thomas Watts, Investment Analyst, abrdn Portfolio Solutions, comments on the economic data releases this week;
“With football’s European Championships getting into full flow in Germany, where better to head for both fans and economists alike than the continent.
Tuesday not only brings us inflation data for the Eurozone but also a raft of Germany specific data, such as economic sentiment for the bloc’s largest economy. The results of the survey are so well respected due to the sheer breadth of its sample size, asking about 275 German institutional investors and analysts to rate the relative six month economic outlook for the Eurozone. The data is also very useful as it acts as a leading indicator of economic health, with investors and analysts being highly informed by virtue of their job and changes in their sentiment can be an early signal of future economic activity.
Tuesday also sees US retail sales figures released and should offer a useful gauge to judge whether price rises will start to slow soon, with the consumer tightening their belt. The data also gives us an indirect view on the labour market, with a free-spending consumer hinting at an employment landscape that continues to offer an ample number of jobs on offer and rising hourly remuneration.
With England starting their campaign this week too, it will be pertinent to listen to the Bank of England (BoE) and get an update on the campaign they have been waging on inflation for the last 2 years now. Those on Threadneedle Street are due to hold a press conference on Thursday, announcing any moves on base rates after their most recent committee meeting. With futures markets predicting that the bank won’t cut until later in the summer, many investors will be looking towards any forward guidance for hints on when this will come.
However, unlike May’s press briefing, June’s decision will just be accompanied by a brief statement rather than the full monetary policy report and press briefing. So, if there is no change to interest rates this week, there would be little guidance on when this is likely to happen. Last month seven members of the Monetary Policy Committee (MPC) voted to hold, while two voted for a cut. It’s likely that more of the MPC could join the cut cohort, but probably not enough to force a decision just yet.”
