Eurozone: Range of interesting events next week - Danske Bank
|In Europe next week, a range of important decisions loom at the EU summit and markets will keep a close watch on monetary policy hints from the ECB’s Sintra Forum, explained Danske Bank analysts.
Key Quotes:
“On the politics front, we expect the EU summit from 20-21 June to be interesting as we might get more clarity on the front-runners for the EU Commission presidency and other EU top positions. In our view, markets will also monitor closely the Council’s decision with regard to formally opening an excessive deficit procedure (EDP) against Italy, after on 5 June the Commission found the country in violation of the debt reduction rules for 2018. This could mark the starting shot for a renewed budget fight with Brussels and weigh on market sentiment.
“On the data front, we expect the June PMIs to be in the limelight on Friday. Driven by a further improvement in the order-inventory balance, manufacturing PMI remained broadly stable at 47.7 in May. Still, we see the improvement in new orders as temporary in light of the trade war escalation and hence look for further downside for the manufacturing PMI in June (at 47.6) and in coming months. In contrast to industry, activity in the services sector continues to hold up well overall but new incoming business and expectations still eased in May. This leaves us looking for a slight dip in the services PMI from 52.9 to 52.7 in June.”
“The ECB’s annual conference in Sintra takes place from 17-19 June. A significant number of policymakers are set to speak at the conference and while much of the discussion is set to be academic in nature, we will be closely watching Mario Draghi’s welcome address on Monday evening and introductory remarks on Tuesday morning. In 2017, he used the event to signal a potential upcoming change in monetary policy, which led to a sharp market sell-off.”
“Last but not least, the final May HICP figures due out on Tuesday should reveal which services price components dragged core inflation back down to 0.8% (from 1.3% in April).”
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