US adds fewer jobs than forecast
The May employment report was a disappointment save for a continued drop in the unemployment rate. 138,000 new jobs were added last month, while revisions to March and April data trimmed 66,000 from pervious totals. Economists had expected a rise of 184,000 nonfarm payrolls. Wage gains were steady at 2.5% versus a year ago. The bright spot in the report was the continued fall in the unemployment rate, which edged down to a 16 year low of 4.3%.  While weaker than expected, the data likely won’t dissuade the US Federal Reserve from hiking rates later this month.


Merkel downplays past partnerships
Speaking at a campaign event inside a Bavarian beer tent shortly after the Nato and G7 summits, German chancellor Angela Merkel said the times when Europe could rely on others were over. She said while friendly relations with the US and UK are needed, she added that “we have to fight for our own future ourselves”. The German federal election takes place on 24 September.


Draghi: Not ready to unwind stimulus
Appearing before the European Parliament’s committee on economic affairs this week, European Central Bank president Mario Draghi downplayed the odds of any shift in policy at next week’s rate-setting meeting. Economic growth is improving but inflation remains subdued, the central banker said, adding that the economy still requires substantial stimulus. Some analysts had expected the ECB to signal that it will begin tapering bond purchases later this year. Very subdued eurozone inflation data (+1.4% year over year) released later in the week further tamped down expectations of a policy shift.


UK polls tighten
Opinion polls ahead of next week’s UK general election have been all over the map, with some showing the Conservatives with a lead as small as 3% and others indicating a lead as wide as 15%. What is not in doubt is that the race has tightened. Recall that the Conservatives held a 22% advantage on the day the election was called back in April. Not helping the Conservatives, Prime Minister Theresa May was criticized for skipping a BBC-sponsored debate, choosing instead to send a surrogate. Labour Party leader Jeremy Corbyn pounced on the decision. May tried to keep the focus on Brexit, saying Corbyn is ill suited to lead those negotiations with the European Union.  


US pulls out of Paris Agreement
Saying he was elected to represent the voters of Pittsburgh, not Paris, US president Donald Trump this week announced that the United States would pull out of the Paris climate deal. The agreement put the US at a disadvantage, Trump said, highlighting its lack of enforcement mechanisms. Trump offered to renegotiate the deal, though Germany, France and Italy balked at the notion.


Beige Book less upbeat
Optimism waned in a few districts, the Fed reported this week in its Beige Book. Seven of the 12 Fed districts reported growth as “modest” since the last report on 19 April, while four reported “moderate” growth and one district — New York— was flat.  Markets still expect the Fed to hike rates later this month, but with inflation pressures moderating, future rate hikes are less certain than they were earlier in the year.


Italy moving closer to early elections
Elections could come as early as this autumn if the Italian parliament adopts a new election law resembling German’s proportional system, with a 5% cutoff for smaller parties. If the law is approved in the coming weeks, as expected, Italians could go back to the polls around the same time as Germany votes on 24 September. The ruling Democratic Party and the eurosceptic Five Star Movement are nearly tied atop the polls.


Europe continues to hog the growth spotlight
While manufacturing in the US and China moderated slightly in May, Europe continues to show strength. The eurozone manufacturing purchasing managers’ index firmed to 57.0 from 56.7 in April, the highest in six years. UK PMI stayed robust at 56.7, down from April’s 57.3, while the US ISM Manufacturing Index saw slight improvement to 54.9 In May from 54.8 in April. China’s official PMI stood unchanged at 51.2, though the Caixin PMI dipped to 49.6 from 50.3.




With 492 of the members of the S&P 500 Index reporting, earnings are expected to have increased 15.4% in the first quarter versus the same quarter a year ago. Excluding the energy sector, earnings rose 11.1%. Revenues are seen up 7.3%, and up 5.4% excluding energy. 








Mon, 5 June


Service sector purchasing managers indices

Tues, 6 June


Reserve Bank of Australia interest rate decision

Tues, 6 June


Retail sales

Wed, 7 June


Foreign exchange reserves

Wed, 7 June


Gross domestic product

Thurs, 8 June


Gross domestic product

Thurs, 8 June

United Kingdom

General election

Thurs, 8 June


Trade balance

Thurs, 8 June


European Central Bank rate decision

Fri, 9 June


Unemployment rate



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