While last week was a short one, there was still plenty of items on the docket to analyse. The Bank of England’s quarterly inflation report and interest rate decision was released. The Bank of England held interest rates at 0.1%, in line with expectations. There was no change to the total asset-purchase programme, although chief economist Haldane dissented and called for a cut in purchases. There was a sharp increase to the 2021 GDP growth forecast by 7.25%, although the 2022 outlook was cut slightly which was not a big surprise given the success of the vaccine rollout. A longer-term factor was that unemployment was also downgraded significantly from 6.4% to 5.1% for the end of the year. Governor Bailey expected that higher inflation rates would be transitory, although markets were less convinced.

The UK local elections also provided a domestic focus with political uncertainty still fresh in people’s minds. The primary focus was on the Scottish vote with the ongoing debate surrounding a second Scottish referendum. Over the weekend, the results were released with the Conservatives strengthening their grip on power and the Scottish National Party (SNP) failing to obtain a majority. This boosted the Sterling as it pushed the potential for a second Scottish referendum slightly further away.

In the meantime, the most eagerly watched figures were from the US employment report. The headline figure turned a few heads with expectations of job creation close to one million given the reopening of the economy in April. The US April NonFarm Payrolls (NFP) reported 266 thousand well below the one million forecasts. This resulted in the weakening of the US Dollar as the 10-year yields quickly decreased which is a leading indicator for interest rate policy.

Looking to the week ahead, the market will pay close attention to US data readings following the big miss on US employment data last week. This will hopefully articulate whether we are seeing a cooling-off period in economic activity; in particular, the focus will be on the consumer data in the form of retail sales and consumer confidence. UK data and news will also be in focus with the first reading of monthly and quarterly GDP on Wednesday whilst the Bank of England Gov Bailey will be speaking on several occasions.


  • UK Halifax House Price Index

It is a slightly quiet start to the week in terms of economic data with only the UK house price index set for release. However, despite the light docket, the market will continue to focus on rhetoric and sentiment following the news from the UK local elections.


  • UK BRC Sales Monitor
  • GER ZEW Survey
  • BoE Baily Speaks

The key focus of the day will be on Bank of England’s Gov Bailey who is due to participate in a webinar panel discussion about Secured Overnight Financing Rates, term rates, and loan market developments. The market will keep a close eye on the language he uses as it could be seen as a signpost for future policy. In the meantime, with the COVID-19 vaccination situation in Europe, the market will focus on the German ZEW survey. Another highlight this week will be the ZEW survey involving 275 German institutional investors and analysts on their current view and 6-month view of the economy. This will provide a basis for sentiment moving forward.


  • UK GDP (Monthly and quarterly)
  • EU Economic Forecast
  • UK BoE Baily Speaks
  • US Inflation

The UK GDP data (first reading) for Q1 and March are due today. Whilst these are unlikely to move the market dramatically due to the lockdown restrictions that were in place at the time, as we are now seeing restrictions ease, this will provide the market with a base level from which growth will be compared to restrictive measures following the relaxation of rules. In the meantime, the EU forecast will be closely monitored given the current situation with regards to COVID-19.  Once again, the Bank of England’s Gov Bailey will speak at an online event hosted by the International Swaps and Derivatives Association. The market will keep a close eye on the language he uses as it could be seen as a signpost for future policy. In terms of economic data, the headline inflation readings are set for release. This will be closely watched following the disappointing labour data.


  • US Weekly Jobless Claims
  • US Producer Price Index
  • UK BoE Baily Speaks

Following last week’s big NonFarm Payrolls miss, the market will be once again focused on labour metrics with the weekly jobless claims being at the top of the agenda. Whilst last week’s jobs number has set back market expectations on yields and ultimately tightening monetary policy, the market will continue to keep a close eye on additional metrics such as inflation. US Factory gate inflation will be watched, and this can sometimes be seen as a precursor for wholesale inflation in the future.  Once again Bank of England’s Gov Bailey will speak at the Citizens’ Panel Open Forum webinar. The market will keep a close eye on the language especially with audience questions expected.


  • UK Retail Sales
  • US UoM Consumer Confidence

The market will focus on US consumer behaviour today in the form of retail sales and consumer sentiment. The retail sales figure are expected to show a big drop off in the month-on-month figures. Whilst this is not surprising following a close to double-figure growth last week it could provide some concern moving forward. Following this is the first reading of the University of Michigan consumer sentiment reading which is expected to show further improvement.

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