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Economic Calendar – Top 5 Things To Watch This Week

Economic Calendar – Top 5 Things To Watch This Week

Investing.com – Global financial markets will focus on this week’s U.S. retail sales data, which should give clearer signs on the strength of the American consumer.

Market players will also pay close attention to comments from a parade of Federal Reserve officials this week for insights into the outlook for monetary policy in the months ahead and the frequency of rate hikes through the end of the year.

Wall Street is divided over whether the Fed will raise interest rates two more times this year, as it has forecast, or three more times.

There are also about 10 S&P 500 companies reporting earnings in the week ahead on Wall Street, as the earnings season starts to wind down, with big-name retailers such as Home Depot , Macy’s and Walmart among the highlights.

Across the Atlantic, traders will focus on British employment data for further hints on the likelihood of the Bank of England raising interest rates this year, especially in the wake of last week’s dovish meeting.

Meanwhile, in Asia, Japan is to publish preliminary data on first-quarter economic growth as traders look for further signs on the strength of the economy and hints on when the Bank of Japan will start withdrawing stimulus.

The market will also have to navigate other things that worry it in the coming week, such as developments on NAFTA trade talks in Washington, which could wrap up ahead of Thursday’s deadline.

Trade negotiations between the U.S. and China will also keep investors on their toes.

Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.

1. U.S. Retail Sales

The Commerce Department will publish data on retail sales for April at 8:30AM ET (12:30GMT) Tuesday.

The consensus forecast is that the report will show retail sales rose 0.4% last month, moderating from a gain of 0.6% in March.

But excluding the automobile sector, sales are expected to increase 0.5%, after a 0.2% rise a month earlier.

Economists reckon the data will help further shape the debate over how many times the Federal Reserve will raise interest rates through the end of this year after somewhat disappointing inflation figures out of the U.S. last week.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.

Besides the retail sales report, this week’s calendar also features U.S. data on building permits, housing starts, industrial production, as well as surveys on manufacturing conditions in the Philadelphia and New York regions.

2. Fed Speakers

Several Fed speakers will get market attention in the week ahead, as traders watch for clues on the pace of future rate hikes this year.

Topping the agenda will be remarks from incoming New York Fed President John Williams, who speaks on Tuesday at the Economic Club of Minnesota’s May Luncheon, in Minneapolis.

Speeches from Cleveland Fed President Loretta Mester, St. Louis Fed President James Bullard, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari, Dallas Fed Rob Kaplan, and Fed Governor Lael Brainard will also be on the agenda this week.

In addition, the nominee for Fed vice chairman, Richard Clarida, as well as Michelle Bowman, who was nominated to be a Fed governor, will both face Congress on Tuesday for their confirmation hearings.

The Fed kept interest rates unchanged earlier this month, while noting that inflation was starting to inch higher, leaving it on track to raise borrowing costs in June.

The U.S. central bank currently forecasts two more rate hikes in 2018, although market expectations of a third move higher before the end of the year has been gaining momentum in recent weeks amid strengthening inflation prospects.

3. Retailers Headline Last Big Week Of Earnings

While just 10 S&P 500 companies are due to report financial results this week, retailers are just getting started in what will be the last big wave of the first-quarter earnings season.

Home Depot (NYSE:HD) unofficially kicks things off when it reports on Tuesday; results from Macy’s (NYSE:M) are on the agenda for Wednesday; while Walmart (NYSE:WMT), the world’s largest retailer, is due to report results on Thursday.

Nordstrom (NYSE:JWN), JCPenney (NYSE:JCP) and Children’s Place (NASDAQ:PLCE) are among the other major retailers reporting this week.

In addition, blue chips such as Deere (NYSE:DE) and Cisco (NASDAQ:CSCO) will also report.

U.S. stocks rose on Friday, booking a week of solid gains, as a rally in energy and technology stocks provided a lift higher.

The Dow rose 2.3% last week, its biggest weekly gain since March, while the S&P 500 and Nasdaq climbed 2.4% and 2.7% respectively.

4. UK Employment Report

The UK Office for National Statistics will publish the monthly jobs report at 0830GMT (4:30AM ET) on Tuesday, and it will be watched more for what it says about wages than hiring.

The claimant count change is expected to rise by 13,300 in March, with the jobless rate holding steady at 4.2%.

More importantly, wage growth including bonuses is forecast to rise 2.7%, a tad slower than the 2.8% gain seen in February.

Should the data miss estimates, the pound could face renewed selling pressure after sliding against its major peers last week in the wake of a dovish Bank of England policy meeting.

The BoE held interest rates steady last week and said weak growth during a snowy start to 2018 was likely to be only temporary, but it wanted to see a pick-up in the economy in the next few months before raising borrowing costs.

Britain’s economy grew more slowly than most of its peers in the first quarter of 2018 due to a mix of unusually snowy weather and headwinds from Britain’s impending exit from the European Union.

5. Japan Preliminary Q1 GDP

Japan will publish preliminary first-quarter economic growth data at 8:50AM Tokyo time on Wednesday (2350GMT Tuesday).

The report is expected to reveal that the world’s third-largest economy shrank for the first time in two years due to weak private consumption and softer export demand.

Gross domestic product probably contracted at an annualized rate of 0.2% in the first quarter after a 1.6% expansion in the final quarter of 2017.

If confirmed, that would mark the first contraction in Japan’s economy since late 2015, following eight straight quarters of growth, which was the country’s longest period of economic expansion since its 1980s bubble economy.

The annualized contraction would translate into a flat reading from the previous quarter.

Private consumption, which accounts for roughly 60% of gross domestic product, was seen recording no growth in the January-to-March period, after a 0.5% gain in the previous three-month period.

In addition to the GDP report, Japan is also slated to produce data on core machinery orders, which is looked at as a good indicator of capital spending in the coming six to nine months.

The Bank of Japan kept policy steady last month, but ditched a timeframe it had set for hitting an inflation target, in a surprise move analysts say is aimed at keeping market expectations for more stimulus in check.

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