The strength in the U.S. jobs report helped unwind a lot of the recent angst over trade tensions and geopolitical uncertainties that many investors feared were jeopardizing the global upswing in growth. The acceleration in the U.S. should override tariff worries, and the momentum should help offset the slowing out of Europe, especially as the uncertainties over the political situations in Italy and Spain have been resolved for now. The markets are likely to be consolidative this week as a number of factors impact./p>

United States: This week’s calendar is light with few top tier reports, limited Treasury supply, and no Fedspeak given the blackout period ahead of the June 12, 13 FOMC meeting. Earnings have also slowed to a crawl. As for data, the May ISM non-manufacturing numbers (Tuesday) will be of most interest given the timeliness of the release. An increase by 0.7 point to 57.5 is expected, after falling 2.0 points to 56.8 in April, after hitting a 12-year high of 59.9 in January. The April JOLTS data (Tuesday) will add some details to the outlook but will be anticlimactic following the employment report. And while it continues to corroborate the strength in the labor market, it also suggests the market may not be as tight as perceived. The April trade report (Wednesday) will be tracked given the tariff uncertainties, and it will also help fine tune the improved Q2 GDP outlook.

Canada: Canadian employment tops a busy week of economic data. The employment report (Friday) is expected to reveal a 20.0k bounce in jobs during May after the 1.1k dip in April, while the unemployment rate holds at a 40-year low 5.8%. The trade report (Wednesday) takes second place in the rankings of most-important-release-this-week, with the deficit expected to narrow to -C$2.8 bln in April from a -C$4.1 bln shortfall in March. Q1 productivity (Tuesday) is projected to slip 0.1% (q/q, sa) following the 0.2% gain in Q4. Building permits (Wednesday) are expected to fall 2.0% (m/m, sa) in April after the 3.1% rise in March values. The May Ivey PMI (Wednesday) is anticipated to slip to a still firm 70.0 in May from the seasonally adjusted 71.5 in April that was the firmest reading since the 73.2 seen in March of 2011. May housing starts (Friday) are expected to expand at a 215.0k unit pace, little changed from the 214.4k growth rate in April. Q1 capacity utilization (Friday) is seen rising to 86.1% from the 86.0% in Q4 that was strongest since Q2 of 2007’s matching 86.0%.

The Bank of Canada publishes the twice annual Financial Stability Review (Thursday, 10:30 ET) with a press conference to follow at 11:15 ET. In the November Review, the Bank said the high level of household indebtedness and housing market vulnerabilities were the most important vulnerabilities.

Europe: Political uncertainty in Italy and Spain may be resolved for now. But while the markets celebrated the new governments in Spain and Italy on Friday, the changes could spell trouble for the ECB and the stability of the Eurozone down the line if they bring uncontrolled deficit spending. With that in mind, and spreads having come in again, the chances that the ECB will commit to an end date for QE at the June 14 meeting are rising, especially after the jump in May HICP inflation. German orders data this week will be watched carefully, but even if data disappoints, it would further highlight that the central bank’s window of opportunity for the next step toward policy normalization is closing. Wrapping the end of QE in dovish guidance may be the best way to deal with the current uncertainty.

This week’s round of data includes key German reports, including the April manufacturing orders (Thursday) which are expected to show a 0.7% m/m rebound. German industrial production for April (Friday) and the trade balance (Friday). Final Eurozone Q1 GDP is widely expected to be confirmed at 0.4% q/q, but comes with a slight downward bias, after the revision to the final French reading. The earlier timing of Easter and adverse weather conditions left their mark on growth in the first quarter and the data are too backward looking to really change the outlook.The calendar also has final Eurozone May services PMI, Eurozone retail sales and PPI inflation, and a German I/L bond auction Thursday, followed by a 5-year Bobl auction Wednesday. France sells bonds Thursday.

UK: Brexit negotiations will continue this week while the data schedule is fairly quiet, highlighted by the release of the construction and services PMI surveys for May (due Monday and Tuesday, respectively). The construction PMI expected to come in with a headline reading of 52.0, down from 52.5 in April, which would indicate a modest slowing in the pace of expansion. Market participants will be keeping a watch out on the evolving Brexit negotiation, which is in a crucial phase and which remains fluid.

Japan: In Japan, April personal income and PCE (Tuesday) should show consumption rising to a 1.0% y/y pace from the previous -0.7%. The second look at Q1 GDP (Friday) is penciled in at -0.4% q/q, modestly improving from the preliminary -0.6% pace. The April current account surplus (Friday) is set to narrow to JPY 2,000.0 bln from 3,122.3 bln.

China’strade balance (Friday) will get a lot of attention given the trade tensions with the U.S., though we shouldn’t be able to discern any impacts. The balance was at a $28.8 bln surplus in April with gains of 12.7% y/y for exports and 21.5% y/y for imports.

Australia: The RBA’s policy meeting (Tuesday) is expected to result in no change to the current 1.50% rate setting. In the April meeting, Governor Lowe repeated that the low level of interest rates is supporting the economy. Something similar is expected in the June statement, consistent with a low for long outlook for policy. The data slate is highlighted by Q1 GDP (Wednesday), expected to accelerate to a 0.7% growth rate (q/q, sa) from the 0.4% pace in Q1. Retail sales (Monday) are projected to expand 0.4% (m/m, sa) in April after the flat reading in March. The current account (Tuesday) is projected to narrow to a -A$9.0 bln deficit in Q1 from -A$14.0 bln in Q4. The trade balance (Thursday) is seen narrowing to a A$1.1 bln surplus in April from A$1.5 bln in March.

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