Week Ahead and in Review: Federal reserve minutes point to later hike

Week in review: In the US, the minutes of the Fed show that the number of rate-setters favouring a rate hike in June were outnumbered by those preferring to wait, due to weak data in Q1. While the rise in oil prices was expected to support a gradual rise in inflation, the strength of the dollar and the situation of the labour market in Q1 were sources of concern.

In Europe, EU leaders met in Riga to discuss relations with countries on its eastern border. But the meeting was also an opportunity for further negotiations with Greece. Tsipras, Merkel and Hollande met on the sidelines of the conference but it is unclear whether they are closer to a deal, as chancellor Merkel stated that further progress on reforms was needed. The new important deadline will be 5 June, when Greece is due to pay EUR 300mn out of 1.5bn payments scheduled in June.

Meanwhile, in Portugal, the Debt management agency IGCP continued to benefit from the ECB quantititative easing programme, as rates on the 6-month bill issued on Wednesday were negative at -0.02%.

Week ahead: May consumer confidence indicators in the EU should show that the recovery continued. GDP details will allow us to better assess whether domestic demand is picking up, particularly in Portugal.

  • Thursday 28 May: European sentiment indicator – The ESI should continue to rise but at a moderate rate, given that it’s above its long term average in many countries
  • Friday 29 May: GDP demand details of EU, including Portugal, should give a picture of growth drivers in Q1