Sunday May 23 2021 03:39
11 min
It’s relatively quiet in terms of major announcements this week. The bulk of the key market-moving data will be coming from the US, as preliminary quarterly GDP figures are released alongside the latest CB consumer confidence sentiment. Both will be enlightening as to US economic sentiment as inflation stops lurking in the background and comes to the fore.
We start, though, with New Zealand. The Reserve Bank of New Zealand’s latest cash rate decision and statement is due early on Wednesday morning. No major changes are expected to the current official cash rate (OCR) of 0.25%, although inflationary pressures look like they are starting to make their mark on New Zealand’s economy.
RBNZ targets 2% inflation, which may have already been breached.
“We are forecasting a 0.6% increase for the quarter yielding 2.6% annual inflation. Another way of thinking about this is that CPI inflation for the three quarters to March 2021 was already 2.0%,” says Bank of New Zealand’s Head of Research Stephen Toplis.
While inflation is probably already here, the likelihood of a rate hike is low. ANZ’s Chief Economist Sharon Zollner and senior strategist David Croy suggest rates won’t rise until August 2022, rising to 0.75%. The pair also predict a further two rate increases across 2023, culminating in a final 1.75% figure.
Looking to US data, preliminary q/q GDP figures are released on Thursday, following up the advance reading from late April. At 6.4%, annualised US GDP growth was the second-largest since 2003, surging as the economy reopens again. Growth was stimulated by numerous sectors, including increased personal consumption, fixed residential and nonresidential investment, and government spending.
Preliminary readings are the mid stage of the overall GDP reporting process before the final reading is released at the end of the month. The advanced reading is generally the strongest indicator, but revisions to final figures are not uncommon.
US consumer confidence is in focus too. Friday sees the latest printing of the CB consumer confidence index. April’s reading beat expectations, rising from 109 points in Mach to 121.7. Consumers had more cash in their pockets, thanks to Biden’s stimulus cheques, and were happy to spend it.
However, inflation could cloud May’s Consumer Board readings. The preliminary reading for the University of Michigan Index of Consumer Sentiment dipped to 82.8 for May from 88.3 in April – a 6.2% month-on-month decline.
Consumer sentiment has taken a knock due to higher-than-expected headline inflation, recorded at 4.6% in April. This is the sharpest rate of increase since 2008. Headline inflation stood at 2.6% in March.
Increased consumer spending was a cornerstone of Q1 GDP growth. Should that retract as inflation grows, the calls for the Fed to shake up its monetary policy could become all the more louder as the year rolls on.
Date | Time (GMT+1) | Currency | Event |
Tue 25-May | 9.00am | EUR | German ifo Business Climate |
3.00pm | USD | US CB Consumer Confidence | |
Wed 26-May | 3.00am | NZD | Official Cash Rate |
3.00am | NZD | RBNZ Monetary Policy Statement | |
3.00am | NZD | RBNZ Press Statement | |
4.00am | NZD | RBNZ Press Conference | |
3.30pm | USD | US Crude Oil Inventories | |
Thu 27-May | 1.30pm | USD | Preliminary GDP q/q |
1.30pm | USD | Unemployment claims | |
3.00pm | USD | Pending house sales | |
3.30pm | USD | US Natural Gas Inventories | |
Fri 28-May | 1.30pm | USD | Core PCE Price Index m/m |
Date | Company | Event |
Tue 25-May | Intuit | Q3 2021 Earnings |
Wed 26-May | Nvidia | Q1 2022 Earnings |
Thu 27-May | Salesforce | Q1 2022 Earnings |
Costco | Q3 2021 Earnings | |
Royal Bank of Canada | Q2 2021 Earnings | |
Toronto-Dominion Bank | Q2 2021 Earnings | |
Fri 28-May | National Bank of Canada | Q2 2021 Earnings |