Talk is easy. Action should not be.
- ECB President Draghi clearly has some way to go in battling his addiction to easing, offering dovish comments in his speech to the European Parliament. However, the rest of the governing council may be less supportive, and we expect a move to organically tighten quantitative policy in 2018.
- European inflation data for May is starting to come out, with Spain and Germany leading the way. Headline inflation rates should moderate – there is still some after-effect from the timing of Easter, and oil base effects have a role to play too. Nonetheless, inflation remains roughly in line with long-term averages.
- Japanese consumers increased retail sales more than expected, but spent less than expected overall. This demonstrates a relative consumption pattern shift (less on services, effectively), which is not so surprising given that Japanese consumers remain concerned about future income growth.
- US personal income and spending data is due. There have been suggestions that immigrant communities in the US are spending less as a result of the political climate. However, spending data is influenced mainly by the consumption of higher income groups. The Fed’s favored inflation measure, the PCE deflator, is also due.