The week ahead: Europe - Nomura

Nomura's The week ahead for Europe...

Key Quotes:

"German Ifo (Monday): We expect the German Ifo business climate index to increase to 115.2 in June from 114.6 in May. We forecast both the current situation and expectations indices to pick up to 106.8 (from 106.5) and 124.2 (from 123.2) respectively. 

UK CBI distributive trades survey (Tuesday): Rising inflation and falling real wage growth are having a negative impact on consumer spending in volume terms. The reported and expected balances of this survey (which are indicators of annual retail volumes growth) provide a useful addition to the other indicators of retail sales (official, BRC etc). 

BoE household borrowing (Thursday): Some members of the MPC and FPC have been particularly concerned about the strong growth rate of consumer credit in recent months, which forms part of this report. Net mortgage lending, however, fell to its lowest in April in over a year as the number of approvals slipped to under 65k during the month. This adds to the signs of a slowing housing market. 

UK GDP, final estimate (Friday): In the absence of any revisions to the headline rate of growth, the focus within this report will be on the saving ratio (at a record low in Q1 but expected to be revised higher going forward), household incomes (being buoyed relative to average earnings on account of rising employment) and the breakdown of consumer spending (the parts of spending which are likely to weaken most quickly are those with a large imported component and those that are more luxury than necessity). 

UK current account (Friday): The trade balance in goods and services deteriorated by almost £4.5bn between Q4 2016 and Q1 this year. A typical seasonal improvement in the transfers balance and a similar income balance to Q4 (where we saw the lowest deficit for three and a half years thanks to increased returns on overseas foreign direct investment) would raise the Q1 current account deficit to £16bn (around 3.25% of nominal GDP) from £12bn in Q4. 

Euro area, preliminary June inflation (Friday): We expect the flash reading of euro area HICP inflation to remain at 1.4% y-o-y in June. We forecast core inflation to increase to 1.0% from 0.9%. Although oil price declines will weigh on headline HICP inflation, core HICP inflation is likely to shift up as the recovery has strengthened and broadened. At the country level, we forecast the flash reading of German HICP inflation to climb 1.6% y-o-y in June after 1.4% in May."