Weekly economic and financial commentary

Summary

United States: Signs of a Slowdown Begin to Emerge

• April brought a steep 16.6% decline in new home sales and a 3.9% drop in pending home sales, the latest signs the housing market is cooling down amid sharply higher mortgage rates. Personal income rose 0.4% during April, while personal spending increased 0.9%. Inflation continues to run hot. The headline PCE deflator was up 6.3% year-to-year, while the core measure rose 4.9%.
• Next week: Consumer Confidence (Tue), ISM Manu. & Services (Wed/Fri), Nonfarm Payrolls (Fri)

International: Mixed Fortunes for Europe's Economies

• This week's May PMI surveys offered the latest insight into how some of Europe's key economies are faring, and indicated varying fortunes across the region. The Eurozone PMIs reported a mild decline, suggesting a modest loss of momentum, though to levels that remain well within growth territory. For the United Kingdom however, the PMI surveys suggested the economy could suffer a sharper slowdown.
• Next week: China PMIs (Tue), Eurozone CPI (Tue), Canada GDP (Tue)

Interest Rate Watch: FOMC Minutes Show Another 50 bps Rate Hike Is Probable

• The minutes from the May FOMC meeting were released this week and offered additional evidence that a second consecutive 50 bps rate hike is imminent.

Credit Market Insights: Household Well-Being Strengthens in 2021

• This week, the Federal Reserve Board issued its Economic Well-Being of U.S. Households in 2021, a report which surveys the financial health and sentiment of U.S. adults and their families. Financial well-being among respondents reached its highest level since 2013 when the survey first began.

Topic of the Week: Biden Announces an Asia-Specific Strategy

• We unpack a few recent developments in terms of U.S. foreign relations this week, like the newly introduced Indo-Pacific Economic Framework, where things stand with trade policy more broadly and how there's a review under way of U.S. tariffs on China that likely won't lead to large changes to preexisting policy.

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