Post the FOMC, the ECB’s Chief Economist was very quick to point out the Eurozone economy was a long way behind the USA. With the suspicion that their board is worried about the recent strengthening of the euro.
Canada
Headline inflation was strong May CPI +0.5% MoM (0.4% exp., 0.5% prev.) and +3.6% YoY (3.5% exp., 3.4% prev.). Core CPI was tamer 1.8% YoY (1.8% exp., 1.7% prev.) and the median 2.4% YoY (2.3% exp., 2.3% prev.) and trimmed mean YoY% 2.7% (2.3% exp., 2.3% prev.).
Eurozone
Apr industrial production 0.8% MoM (0.4% exp., 0.1% prev.) and +39.3% YoY (37.4% exp., 10.9% prev.) German PPI reflected global trends +1.5% MoM (0.7% exp., 0.8% prev.) and +7.2% YoY (6.4% exp., 5.2% prev.)
Japan
Inflation was slightly better than expected with Core CPI was -0.2% YoY (-0.3% exp., -0.2% prev.) and headline -0.1% YoY (-0.2% exp., -0.4% prev.) driven by a drop in mobile phone charges.
The BoJ met and kept policy rate unchanged at -0.1% (-0.1% exp., -0.1% prev.) and the 10yr YCC target at 0.0% (0.0% exp., 0.0% prev.). More importantly they decided to extend their financing programs by 6 months to March-2022 and introduce a climate change requirement for financial institutions.
Scandinavia
Norway The Norges bank met and kept policy rates unchanged at 0.0% (0.0% exp., 0.0% prev.) The big news here is that their rate path projection indicated that the first rate hike will come at this September’s meeting.
Switzerland
The SNB met and kept policy rates unchanged at -0.75% (-0.75% exp., -0.75% prev.)
UK
Jobs data was strong with wages up and several measures of employment all printing better.
CPI was this month’s surprise printing +0.6% MoM (0.3% exp., 0.6% prev.) and +2.1% YoY (1.8% exp., 1.5% prev.) with core moving up to +2.0% YoY (1.5% exp., 1.3% prev.). It was left to RPI top be this month’s common sense inflation measure with RPI +0.3% MoM (0.3% exp., 1.4% prev.) and +3.3% YoY (3.3% exp., 2.9% prev.). Core retail sales was disappointing at -2.1% MoM (1.4% exp., 9.0% prev.) and +21.7% YoY (27.1% exp., 37.7% prev.) but this mostly reflects a bumpy reopening process. PPI was higher, echoing global trends.
USA
Retail sales disappointed, missing expectations, but some volatility is expected in this data series as the economy reopens. PPI was higher, echoing global trends. Industrial production +0.8% MoM (0.7% exp., 0.7% prev.) The FOMC kept the Federal reserve target rate unchanged at 0.0% to 0.25%. However, it did move its IEOR and RRP rates 5 basis points higher. The week was rounded out with the Philadelphia Fed business outlook printing 30.7 (31 exp., 31.5 prev.)
Australia
Minutes of June RBA Policy Meeting gave an indication of the decisions on QE and YCC in the next policy meeting. Language surrounding the extension of YCC was less clear and focused on the economy achieving a sustainable level of inflation. The language on QE was very specific with 4 options listed: cessation; increase; slower pace over a longer period; and a dynamic approach. In a speech titled “From recovery to expansion” RBA governor Lowe ruled out the cessation of QE and raised the bar for YCC extension.
Jobs data was, in a word, stunning. Printing at +115.2k (30.0k exp., -30.6k prev.) at an overall level. The components were also strong with increases in part time, full time and the participation rate which printed at 66.2% (66.1% exp., 66.0% prev.). The unemployment rate dropped to +5.1% (5.5% exp., 5.5% prev.) which is stronger than pre-pandemic levels. This data has effectively put the final nail in the coffin for YCC extension.
New-Zealand
1Q GDP surprised everyone, printing +1.6% QoQ (0.5% exp., -1.0% prev.) and 2.4% YoY (0.9% exp., -0.9% prev.). This data has erased the Q4 drop and sets the kiwi economy on a strong path going forwards.
