- The US employment report understated unemployment, but there are signs of stabilization in the labor market. The key issue for the economy is whether people will spend the savings that they have accumulated while in lockdown. Unemployment benefits were more than most people earn in the US, and as spending was down 20% to 30% that has led to enforced savings.
- OPEC agreed to extend production cuts by a further month, with those countries that exceeded their quotas saying they will cut harder in the future. Oil demand is gradually improving as lockdowns ease in Europe and the US, allowing more travel.
- German industrial production is due. In month on month terms, the consensus range is -7% to -32%. It seems reasonable to expect the number to come within a 25% range. Around 85% of Germans had no drop in income during lockdown, so they do have money to spend. Whether they spend it on goods made in Germany is more uncertain.
- Chinese May trade data showed a larger surplus than expected. Lower oil prices helped, as did demand for medical exports. Political sensitivities are likely to increase. Brazil's soybean exports to China increased 60% y/y in volume terms, which may be a focus for the US.