Macro

UK:
Halifax and Nationwide Building Society, the UK’s two largest mortgage lenders, reported a significant decline in house prices in April, suggesting a potential slowdown in the market’s recovery. However, the Royal Institution of Chartered Surveyors stated that its May housing market survey showed improvements in key indicators such as house prices, new inquiries, and sales agreements compared to the previous month, although they remained in negative territory.

EU:
Officials from the European Central Bank (ECB) indicated that borrowing costs are likely to increase in June, although there was less consensus on implementing further rate hikes in the following months. ECB President Christine Lagarde and Bundesbank chief Joachim Nagel maintained their hawkish stance, citing limited signs of easing in underlying price pressures. However, Dutch central bank Governor Klaas Knot appeared to adopt a less hawkish position. While acknowledging the need for rate hikes, Knot abandoned his previous insistence on increases in June and July, emphasizing the importance of taking step-by-step decisions based on evidence of the effectiveness of the tighter monetary policy.

According to an ECB survey, median consumer expectations for eurozone inflation in the year ahead decreased to 4.1% in April from 5.0% in March. Revised data revealed that the eurozone economy experienced sequential contractions of 0.1% in both the first quarter of this year and the final three months of 2022, meeting the technical definition of a recession. Furthermore, flat retail sales in April indicated weak consumption in the eurozone, while Germany’s industrial sector continued to deteriorate, with factory orders unexpectedly declining by 0.4% compared to March and industrial output growing by only 0.3% sequentially, falling short of economists’ expectations.

US:
Although the economic calendar for the week was relatively light, it appeared to support investor sentiment, even though hopes of avoiding a recession remained uncertain. The Labor Department’s report on Thursday revealed a sharp increase in weekly jobless claims to 261,000, surpassing expectations and reaching the highest level since October 2021. However, continuing claims unexpectedly decreased, reaching their lowest point in nearly four months.

On Tuesday, data showed a notable contraction in the services sector, but investors found solace in the continued decline of services prices, which have remained relatively stable compared to moderating prices for goods, food, and energy. The Institute for Supply Management’s gauge of prices paid for services reached its lowest level since May 2020, while the gauge for overall activity in the services sector fell to 50.3, indicating a minimal growth (a reading above 50 indicates expansion).