Key U.S. Data Releases and Events

Indicators next week should have a slightly positive gist, with the April trade balance expected to hold steady, May retail sales expected to bounce upwards, May core consumer prices expected to advance a moderate 0.2%, and mid-June consumer sentiment expected to get a lift from the tax rebates.

However, the phantom of higher prices in the oil markets seems to becoming a major obsession that is swinging market sentiment up and down like a helpless yo-yo on a string.

KEY U.S. DATA RELEASES THIS WEEK

Tuesday, June 10 – Trade Balance (Apr.)

Global Insight: -$58.2 Billion
Consensus: -$59.7 Billion
Last Actual: -$58.2 Billion (Mar.)

What to Look For

• Trade deficit to hold steady.
• Oil deficit to widen sharply, but non-oil deficit to improve.

Implications

We expecting the trade deficit to hold steady in April, at $58.2 billion. The oil deficit is likely to widen sharply, because oil prices were higher and oil import volumes were probably higher too. However, we also anticipate a strong rebound in exports after their first drop in 13 months during March. Aircraft exports, which can be highly volatile from month to month, were particularly soft in March, and should see an April rebound. Robust export growth remains a crucial support to the U.S. economy, as domestic demand is weakening.

Thursday, June 12 – Retail Sales (May)

Total
Global Insight: +0.5%
Consensus: +0.5%
Last Actual: -0.2% (Apr.)

Less Autos
Global Insight: +0.7%
Consensus: +0.6%
Last Actual: +0.5% (Apr.)

What to Look For

• Overall retail sales to be up 0.5%.
• Excluding autos, retail sales to move up a solid 0.7%.

Implications

Retail sales increased an estimated 0.5% in May, led by a price-driven surge in gasoline sales. Light-vehicle sales were hurt by the soaring gasoline prices, so sales excluding autos (up 0.7%) were stronger than the aggregate. Initial reports from chain stores for May were weak, but the final tally (up 3.0% year-on-year) suggested that some of the tax rebates were being spent. Finally, some positive news on retail sales!

Friday, June 13 – Consumer Price Index (May)

Total

Global Insight: +0.6%
Consensus: +0.5%
Last Actual: +0.2% (Apr.)

Core
Global Insight: +0.2%
Consensus: +0.2%
Last Actual: +0.1% (Apr.)

What to Look For

• Top-level index to jump 0.6%.
• Core prices to move up a moderate 0.2%.

Implications

We expect the CPI to jump 0.6% in May, led by surging gasoline prices, which probably rose 5.5% during the month. Food prices also pushed higher, but probably less steeply than in April. The core CPI likely increased 0.2%, faster than in May. A core number higher than 0.2% would start to ring alarm bells at the Fed that rising commodity prices are filtering through to core inflation.

Friday, June 13 – Michigan Consumer Sentiment Index (Preliminary, Jun.)

Global Insight: 61.0
Consensus: 59.5
Last Actual: 59.8 (Final, May)

What to Look For

• Consumer sentiment to get a lift from receipt of the tax rebates.

Implications

The Reuters/University of Michigan’s Index of Consumer Sentiment is projected to edge upward from 59.8 in May to 61.0 in early June, as tax rebates offset the sting of higher gasoline prices. Sentiment remains at a recessionary level, however, and consumer spending faces major headwinds from declines in employment levels and bone-crushingly high gasoline and fuel prices.