Italy's pro-euro government
- The new Italian prime minister, Conte, faces confidence votes in parliament today. What the prime minister signals about policy priorities (and the cost of the policy priorities) matters. We published a note today suggesting why markets might have overreacted to euro exit risks, and that history signals a very high cost to any monetary union exit.
- The US Senate majority whip signalled it will not be possible to pass a renegotiated NAFTA treaty in this Congress. This means that the current treaty stays, the US withdraws, or a renegotiated treaty is put before a new Congress after the mid-term elections. US equity market valuations assume that the US remains a part of a complex global trading system.
- Japanese household spending disappointed for the third month in a row in April. Households do not seem to believe that their real incomes are improving. In contrast, warm weather pushed UK BRC retail sales to a four-year adjusted high, supporting the Bank of England's positive view of the UK economy.
- There is little else of significance in terms of data today. Eurozone PMI opinion polls of business sentiment and the US ISM opinion poll of business sentiment are due.