Brexit, UK inflation report and US jobs data takes centre stage
Last week we saw US data finally turn slightly sour, whilst the FOMC expressed concern with regards to the global developments but still left the door open to further rate hikes this year. The latest policy statement indicated that the target of the Fed funds rate remains the same, at 0.25% to 0.50%, as expected. In the statement, the FOMC said that it is "closely monitoring global economic and financial developments and is assessing their implications for the labour market and inflation, and for the balance of risks to the outlook." This now brings the focus back onto economic data, which at the turn of the month has not been performing well. Durable goods, a key measure of U.S. manufacturers’ health suffered its largest annual decline (5.1%) since the recession ended more than six years ago. Meanwhile, the first reading of US GDP missed expectations posting a reading of 0.7% against expectations of 0.8%.
The Brexit continues to take centre stage in the UK, according to a poll conducted by YouGov this morning. The survey intended to gauge public opinion ahead of a referendum, it showed 42% would vote to leave the EU compared to 38% who wanted to stay.
Already this morning we have seen further deterioration as the Chinese manufacturing PMI fell to a three year low this morning. Meanwhile looking to the rest of the morning we have the UK Manufacturing data set for release as well as the lending numbers. Across the pond, the US Manufacturing numbers are set to hit the wires. After the European markets close, ECB President Draghi is due to testify about the 2015 ECB Annual Report before the European Parliament.
- UK Manufacturing
- UK Lending to Individuals
- US ISM Manufacturing
- ECB President Draghi
A fairly quiet day in terms of economic data as Unemployment numbers are set for release from Germany and Spain. The UK Construction PMI is also due to hit the wires.
- German Unemployment
- UK Construction
Two key economic indicators are due for release today, one for the UK and one for the US. Focusing on the UK’s number we have the PMI services set for release. The service sector makes up roughly 70% of the UK’s economy. Meanwhile, we also get an early indication of how the all-important jobs report on Friday could look with the release of ADP Employment Report. Also due to hit the wires is the ISM Non-Manufacturing Index.
- UK PMI Services
- US ADP Employment Report
- US ISM Non-Manufacturing Report
The key event for the UK is forecast today with the BOE inflation report. This report includes the BOE's projection for inflation and economic growth over the next two years. A press conference is held afterwards which could give some key insight. With question marks continuing to loom over the timing of the first rate hike in the UK this will be monitored closely for key signals on when this could happen. Throughout the whole of 2015 we saw the picture continuously changing from both the US and UK, could this be repeated?
- BoE Quarterly Inflation Report
- BoE Interest Rate Decision
- US Jobless Claims
In terms of data this is a key day for the US interest rate hawks. The closely watched job numbers are set for release today. Last month we saw payrolls jump to 292k and the Unemployment Rate hold steady at 5%. Whilst we expect the figure to be as high as last month’s another positive number could put a Q1 rate hike back on the table.
- US Non Farm Payrolls
- US Unemployment Rate