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What happened last week?
Equity indexes rebounded positively to recent easing of trade tensions as negotiations have delivered deals between the U.S. and several countries. North American indexes jumped by 2½ to 7 percent last week. The settling of trade differences had gold falling and oil rising.
The effects of the trade war between the U.S. and most countries have not yet represented themselves in economic data. China and the U.S., the two largest economies that contribute heavily to global economic health, reached an agreement to lower tariffs and counter tariffs by more than 100% temporarily. U.S. tariffs on most Chinese goods have been reduced to 30 percent and China has reduced its tariffs on most U.S. goods to 10 percent.
Markets were also buoyed by U.S. inflation news from the Bureau of Labor Statistics. Over the last 12 months, the all-items Consumer Price Index (CPI) increased 2.3 percent before seasonal adjustment. Prices increased 0.2 percent in April, after falling 0.1 percent in March. More than half of the monthly increase can be attributed to the 0.3 percent increase in shelter prices. Energy rose 0.7 percent as natural gas prices increased while the cost of gasoline fell. BLS CPI release
U.S. Producer Price Index fell 0.5 percent in April after being unchanged in March and increasing 0.2 percent in February. On an unadjusted basis, the index for final demand rose 2.4 percent for the 12 months ended in April. BLS PPI release
However, consumer sentiment has fallen to one of its lowest levels and consumer inflation expectations are rising. The survey was conducted before the tariff pause between the U.S. and China, but consumer attitudes will return, if a more permanent deal is not reached. Consumer Sentiment news Watch more here
What’s ahead for this week and beyond?
In Canada, after Victoria Day on Monday, StatsCan will announce Canadian CPI for April, New Housing Price Index, Industrial Producer Price Index, Raw Materials Price Index and retail sales.
In the U.S., building permits, housing starts, new home sales and existing home sales will be reported in a light week for announcements leading into Monday, May 26th when financial firms and markets will be closed to observe Memorial Day.
Globally, Eurozone’s CPI, Harmonized Index of Consumer Prices, construction, consumer confidence, European Central Bank’s Financial Stability Report and Account of Monetary Policy Meeting, Japan’s imports, exports and trade balance, and CPI, and China’s retail sales, house prices, industrial production, unemployment and the People’s Bank of China’s interest rate will be released.
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