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Macroeconomic & Geopolitical

Rising China Tensions Add to Policymakers’ To-Do Lists

28 May 2020 - 3 min read

Rising Hong Kong-China tensions create a geopolitical rift, but the economic impacts could vary. The U.S. May employment report is set to show continued deterioration in the labor market, while we watch for the June ECB meeting next week.


Arrows indicate consensus forecast compared to the previous period. Local dates of release.


  • The May employment report is due on Friday, June 5 and is expected to show continued deterioration in labor market conditions, albeit at a more modest pace than in April. Initial claims rose a cumulative 16.6 million between the April and May payroll reference weeks, suggesting a sizeable decline in overall employment, while the unemployment rate is expected to rise further before beginning its long descent.


  • The ECB Governing Council is meeting next week. At the current pace of purchase, the latest pandemic asset purchase program will be exhausted by September—or later as the ECB needs less activism now that EU fiscal policy is taking much of the burden. Italian spreads have tightened 40 bps in a week. A rise in the PEPP would just be for insurance.

Asia Pacific

  • China PMIs are expected to show modest improvement in May, compared to April, across both manufacturing and services, as the economy continues to recover with improving domestic demand.
  • Meanwhile, household spending in Japan is expected to plummet in April amid states of emergency and other restrictive measures in place during the month.

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