8 Overnight Headlines and 4 Items for the Day Ahead; Inflation Data in Focus

Market strategists at Nomura, including Pooja Kumr, highlighted the following headlines overnight and said investors should keep an eye on the following three items for the day ahead. The firm notes inflation data is in focus.

• Euro area: German inflation in the state of Saxony came in at +0.2% m-o-m, 0.9% y-o-y. This figure is in line with market and our expectations for the German CPI which is due to be released at 1pm. Overall, the information available so far from the German state releases is still consistent with upside risk to the German HICP figure. Our forecast is +0.3% m-o-m, 0.9% y-o-y vs consensus of 0.2% m-o-m, 0.7% y-o-y. The preliminary estimate of Spanish inflation was slightly below market expectations, flat on the month and down from 0.2%.
• UK: The third estimate of Q1 GDP came in at 0.8% (Consensus: 0.8%, Previous: 0.8%).
• Japan: All-Japan core CPI inflation increased by 3.4% in May, consistent with market expectations.
• Japan: Real household consumption spending decreased by 8.0% y-o-y in May, much weaker than the consensus expectation of a 2.3% decrease.
• Japan: The unemployment rate decreased to 3.5% in May from 3.6% in April, the lowest since March 1997.
• South Korea: The current account surplus rose to USD9.3bn in May from USD7.1bn (Nomura: USD9.0bn).
• South Korea: Industrial production growth fell to 2.1% y-o-y in May after revised growth of 2.5% in April (Consensus: 1.0%).
• Thailand: Manufacturing production fell by 4.1% y-o-y in May following a similar drop in April (Consensus: -3.7%; Nomura: -3.3%).

The Day Ahead

• German Preliminary Inflation: We forecast the preliminary estimate of the German HICP to increase by 0.3% m-o-m in June, consistent with annual inflation of 0.9% (Consensus: 0.7%) and thus increasing from 0.6% in May. For the CPI measure, we forecast a slightly smaller rise of 0.2% m-o-m, with annual inflation of 1.0%, increasing from 0.9% in May.
• ECB publishes 3yr LTRO repayment amount for following week.
• German Economy Minister Gabriel and Finance Minister Schäuble speak at German Family Company Federation event in Berlin.
• US University of Michigan consumer sentiment: Consumer sentiment declined at the start of June as consumers were less optimistic about the economic outlook. Consensus expects a slightly higher index at 82.0 at the end of June from 81.2.

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