The Week Ahead June 1-5, 2015 Weighing Wages by Avery Shenfeld Nick Exarhos (416) 956-6527 [email protected] “...another measure, of equal validity, shows that US wages are already under pressure from a tightening in the jobs market.” http://research. cibcwm.com/res/Eco/ EcoResearch.html Unlike the average hourly earnings data from the payrolls report, the Employment Cost Index (ECI), a quarterly series tracking both pay and benefit costs to employers, has seen a notable acceleration in recent quarters. That’s true for both its total compensation series, which includes benefit costs like those associated with Obamacare, but also the subcomponent for wages and salaries (Chart). Can both sets of data be right? Yes, owing to the difference in how wages across industries are weighted in the two reports. The average hourly earnings series is just what its name suggests, and it captures both pay hikes for individual workers or industries, but also compositional changes in the workforce. Increased hiring of younger workers as we’ve seen in the past year, or adding weight in lower paying industries/ occupations, can produce a drop in the average wage even if no specific sector is History suggests that average hourly earnings, while likely to improve a bit in the months ahead, don’t really take off until the jobless rate is well through its fullemployment level. If the Fed waits to see big-time gains in hourly earnings, it will be rushing into multiple rate hikes where the risk of misjudgment will be greater. Instead, the Fed could point to the ECI shift as a signal that inflation will over time climb back to its 2% target, justifying a small dose of monetary tightening this fall. 4 Avg Hrly Earnings, Y/Y % 3 4 Private Wages/ Salaries, ECI, Y/Y % 3 2 2 1 1 0 Nov-13 Royce Mendes (416) 594-7354 [email protected] Markets remain skeptical on that front, and their doubts centre on the lack of upward pressure on average hourly earnings, which have remained tepid. But another measure, of equal validity, shows that US wages are already under pressure from a tightening in the jobs market. Mar-12 Andrew Grantham (416) 956-3219 [email protected] The ECI, in contrast, measures the cost of employing a fixed basket of workers, eliminating the impacts of changes in the industrial or occupational mix of employees. Growth in the employment share of baristas over factory workers will not affect the ECI measure. It’s less useful, then, as an indicator of incomes, but a better guide to whether individual industries could face cost pressures that will propel inflation down the road. Jul-10 Benjamin Tal (416) 956-3698 [email protected] actually paying less than it did a month earlier. Multiplied by changes in the number of hours worked, it’s the most timely measure of the impact of labour market trends on incomes and spending power, at least until personal income data are out for the same month. Nov-08 Avery Shenfeld (416) 594-7356 [email protected] US payrolls data will again be under the microscope in the week ahead, but these days, it’s wages, rather than the number of new hires, that draws the market’s attention. Sure, US GDP was ugly in the first quarter. But consistently good news on US employment suggests that businesses expect a return to climbing demand for their output, enough to have Janet Yellen still on board for a rate hike sometime this year. Mar-07 Economics 0 Q107 Q109 Q111 Q113 Q115 CIBC World Markets Inc. • PO Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8 • Bloomberg @ CIBC • (416) 594-7000 C I B C W o r l d M a r k e t s C o r p • 3 0 0 M a d i s o n A v e n u e , N e w Yo r k , N Y 1 0 0 1 7 • ( 2 1 2 ) 8 5 6 - 4 0 0 0 , ( 8 0 0 ) 9 9 9 - 6 7 2 6 Friday June 5 Thursday June 4 Wednesday June 3 Tuesday June 2 Monday June 1 ` CIBC (L) (H) (May) (H) (Q1) (M) (May) (H) (May) (Apr) 10K 6.8% 6.9% -$2.0B -19.7K -0.1% 6.8% 58.2 -$3.0B Prior (May) (Apr) (May) 9:45 AM MARKIT US MANUFACTURING PMI Final 10:00 AM CONSTRUCTION SPENDING M/M ISM - MANUFACTURING (May) (May) (May) 9:45 AM MARKIT US SERVICES PMI Final MARKIT US COMPOSITE PMI Final 10:00 AM ISM - NON-MANUFACTURING (May) (May) (May) (May) (May) (Apr) Speaker:12:00 PM Daniel K. Tarullo (Governor) 8:30 AM NON-FARM PAYROLLS UNEMPLOYMENT RATE AVERAGE HOURLY EARNINGS ALL EMPLOYEES M/M AVERAGE WEEKLY HOURS ALL EMPLOYEES MANUFACTURING PAYROLLS 3:00 PM CONSUMER CREDIT Speaker: 5:00 PM James Bullard (St Louis) Speaker: 2:15 PM Charles L. Evans (Chic ago) 8:30 AM CONTINUING CLAIMS INITIAL CLAIMS NON-FARM PRODUCTIVITY (May 23) (May 30) (Q1 F) (Apr) 8:30 AM GOODS & SERVICES TRADE BALANCE 2:00 PM FED'S BEIGE BOOK (May) 8:15 AM ADP EMPLOYMENT CHANGE (May 29) (May) NEW VEHICLE SALES 7:00 AM MBA-APPLICATIONS (Apr) 10:00 AM FACTORY ORDERS M/M Speaker: 9:30 AM Stanley Fisc her (Fed Vic e Chair) in Toronto Speaker: 9:05 AM Eric Rosengren (Boston) AUCTION: 4-WEEK BILLS $45B (prev) (Apr) (Apr) (Apr) (Apr) 8:30 AM PCE DEFLATOR Y/Y PCE DEFLATOR Y/Y (c ore) PERSONAL INCOME M/M PERSONAL SPENDING M/M AUCTION: 3-M BILLS $24B, 6-M BILLS $24B UNITED STATES (L) (H) (H) (H) (H) (H) (L) (L) (M) (M) (L) (L) (H) (M) (L) (M) (M) (M) (H) (L) (H) (H) (H) (H) Speaker: 12:30 PM William C. Dudley (New York, President) SAAR = Seasonally Adjusted Annual Rate Consensus Source: Bloomberg Consensus -5.0K -$2.1B H, M, L = High, Medium or Low Significance 8:30 AM EMPLOYMENT CHANGE LABOUR PRODUCTIVITY Q/Q UNEMPLOYMENT RATE 10:00 AM IVEY PMI 8:30 AM MERCHANDISE TRADE BALANCE AUCTION: 30-YR RRB $xx AUCTION: 3-M BILLS $xB, 6-M BILLS $xB, 1-YR BILLS $xB CANADA 200K 5.3% 0.3% 34.5 57.5 -$42.0B 0.0% 52.7 0.2% 1.4% 0.3% 0.2% CIBC $16.5B 224K 5.4% 0.2% 34.5 5K -2.9% 57 -$44.3B 198K 17.0M -0.1% 0.7% 52.0 0.2% 1.4% 0.3% 0.2% Consensus $20.5B 223K 5.4% 0.1% 34.5 1K 2222K 282K -1.9% 57.8 56.4 56.1 -$51.4B 169K -1.6% 16.5M 2.1% -0.6% 51.5 53.8 0.3% 1.3% 0.0% 0.4% Prior Week Ahead Calendar And Forecast CIBC World Markets Inc. The Week Ahead—June 1-5, 2015 Week Ahead’s Market Call by Avery Shenfeld In the US, a very heavy week for data will save the best for last, with Friday’s jobs report sending a comforting message. Payrolls hiring might not quite live up to consensus expectations for May, but if wages see a better monthly gain and the jobless rate drops a tick, markets should be reassured that the economy is on the mend from its Q1 decline. ISM factory and services reports should provide more of the same, with the only real sore spot being a tame reading for personal spending in April. In Canada, the consensus is expecting a rebound in employment after a dip in April, but that’s not obvious given what’s happening in the energy sector and its spillovers elsewhere. While the one-month figures are anyone’s guess, our projection for a weak result in May is tied to our quarterly forecast for a further climb in the jobless rate on below-potential growth in Q2. April’s trade balances will see some improvement, but is likely to still be deep in the red. 3 CIBC World Markets Inc. The Week Ahead—June 1-5, 2015 Week Ahead’s Key Canadian Number: Labour Force Survey—May 100 (Friday, 8:30 a.m.) Nick Exarhos (416) 956-6527 Employment Unemployment Rate 10K -20K 6.8% 6.8% % 000s 8.0 50 7.5 0 7.0 -50 6.5 -100 May-13 CIBC MktPrior -5.0K 6.9% Canadian Employment Nov-13 May-14 Month/Month Chg (L) Nov-14 6.0 May-15 Jobless Rate (R) Source: Statistics Canada, CIBC Forecast Implications—A roughly 7% unemployment rate should prevail in the second and third quarters, before we see better results at the tail end of this year, and heading into 2016. Although the Bank of Canada is sanguine on the prospects for the non-energy sectors of the economy, we’re of the view that will take a bit longer for more exchange rate sensitive industries to truly benefit from a weaker loonie and stronger US economy. Given the emerging challenges facing Canadian employment in 2015, it wasn’t a huge surprise that we inaugurated the second quarter with a sizeable dip in jobs. And because the headwinds aren’t likely to dissipate any time soon, May data is likely to bear out another drop. A 5K decline in employment, combined with an essentially unchanged participation rate, should drive the unemployment rate a tick higher to 6.9%. That will reflect a not-insignificant deterioration in that measure versus where we stood at the end of 2014, with a bit more slippage likely ahead. We’ve pointed to the government sector, along with the oil patch as potential soft spots for the labour markets this year, and that’s likely to be a theme in May. Market Impact—We are below the consensus, so if our call proves to be on the mark, look for weakness in the C$ and support for the front end of the yield curve. Other Canadian Releases: Merchandise Trade Balance—April (Wednesday, 8:30 a.m.) March’s more normal weather saw two-way trade perk back up even if the trade deficit reached a record $3.0 bn. April won’t be subject to the same one-off positive catalysts in terms of volumes, but Canada’s trade balance will benefit from a bounce in crude prices, and a narrowing in the discount on Western Canadian Select. Stronger energy exports to the US should be key in seeing a significant narrowing of the deficit, which is likely to tip the scales at $2.1bn in April. 4 CIBC World Markets Inc. The Week Ahead—June 1-5, 2015 Week Ahead’s Key US Number: 000s US Payroll Employment Employment Situation—May 500 (Friday, 8:30 a.m.) 400 8.0 300 7.5 200 7.0 100 6.5 0 6.0 Andrew Grantham (416) 956-3219 CIBC Employment (change) 200K Unemployment rate 5.3% Avg Hrly Earnings (% m/m) 0.3% Mkt 224K 5.4% 0.2% Prior 223K 5.4% 0.1% -100 -200 May-13 March’s sharp slowdown in hiring looks increasingly like a temporary blip, with payrolls growth rebounding in April and initial jobless claims remaining at historic low levels. But that doesn’t necessarily mean it’s back to the races for payrolls either. With the headline unemployment rate already low, further labour market improvement will increasingly rear its head in the form of longer working hours and wage gains rather than blow-out job gains. Employment growth could look firmer on the household survey, which has lagged a little recently, and drive the unemployment rate a tick lower in May. Monthly Payroll Chg (L) Unemployment Rate (R) Nov-13 May-14 Nov-14 % 8.5 5.5 5.0 May-15F average earnings but which is accounted for in the ECI. The annual rate of hourly earnings growth is unlikely to accelerate much (if at all) in May, but could rise a bit thereafter thanks to more favourable base effects. Forecast Implications—Job growth could continue to run at a 200K or so pace for the remainder of this year. While that’s not as strong as last year (250K average), it would be enough given current population growth to see the unemployment rate reach 5% by year-end. That, and progress on wages, should see the Fed raising interest rates in September. The continued sluggishness in average hourly earnings is a little surprising, particularly as other measures of income (such as the quarterly Employment Cost Index) have been showing clear upward momentum. That could in part be due to a slight lowering in the average age of the workforce recently, which tends to lower Market Impact—A further dip in the unemployment rate could be positive for the US$ and negative for fixed income, as long as payrolls and earnings growth don’t disappoint. Other US Releases: ISM Manufacturing—May Goods & Services Trade Balance—April (Monday, 10:00 a.m.) (Wednesday, 8:30 a.m.) The port strike and harsh winter weather are now well behind us. The US$ was noticeably lower through most of the month and the latest durable goods orders suggest a modest recovery in investment may have begun. So the stage appears to be set for a modest recovery in the manufacturing ISM as well. An improvement to 52.7, from 51.5, may beat consensus expectations handily, but it would still leave the index at a level reflective of fairly subdued growth historically. The ending of the west coast port strike saw a flood of imports coming onshore in March, resulting in a marked widening of the US trade deficit. Strangely, there was little change in exports, which would also likely have been hampered by the poor winter weather and port strike. That could be because they’re sitting in factory warehouses rather than waiting at the dock to be loaded. The delay in timing could mean that the upturn in exports comes in April, seeing the trade deficit shrink to $42.0 bn. 5 CIBC World Markets Inc. The Week Ahead—June 1-5, 2015 Equity Insights Nick Exarhos US Housing Driving Q2 Bounce Home Builders Recently Suffering (L); New Home Sales Can Still Take Share Of Total Homes Sold (R) We were counting on a strong showing from Q2 data. And so far we’ve got reasons to believe that the US recovery hasn’t been derailed. Part of that confidence is based on payrolls snapping back after the Easter surprise, and part is due to the strong results from the US housing market. Pending home sales are now up over 13% from year-ago levels, while housing starts jumped 20% m/m in April. However, stocks tied to that important US sector aren’t exactly feeling the love. At least, not yet. New home sales have been on a clear uptrend since mid-2014, and as a share of total homes sold, there’s plenty of room for them to run up, supporting related stocks. 2150 760 18 2100 720 16 2050 680 12 2000 640 1950 600 New Home Sales (Share of Total, %) 14 S&P 500 (L) S&P Home Builders (R) 8 6 4 Jan-05 Mar-06 May-07 Jul-08 Sep-09 Nov-10 Jan-12 Mar-13 May-14 May Apr Mar Feb Jan 10 Source: US Census Bureau, Bloomberg, CIBC S&P Outshines TSX on Earnings TSX and S&P Earnings Scorecard Chalk this earnings season up as a win for the S&P 500 over the TSX. Both nations faced disappointments on growth in the first quarter, but earnings beats were more plentiful south of the border. Roughly three quarters of S&P 500 companies beat consensus, just over the historical average. That beat rate was 25% better than what was seen on the Toronto Composite. Though our health care sector has been a standout performer, especially on a risk-adjusted basis, the bar may have been set too high for names in that corner of the market. US analysts were more aggressive than those in Canada in marking down expectations for energy earnings, allowing those in the S&P to have a higher beat rate. Earnings Beat Rate (%) Technology Financials Utilities Telecos Cons. Services Health Care Cons. Goods Industrials Materials Oil & Gas All Securities 0 S&P 500 25 50 75 100 TSX Source: Bloomberg, CIBC Canadians Flowing Out of Domestic Equity Funds Though analysts could have been a tad optimistic, Canadian investors haven’t been bullish on stocks, particularly those trading in Canada. IFIC data for April highlights a 26% decline in year-to-date equity fund sales from the same period a year ago, with balanced and bond funds picking up the slack. And amongst those lagging equity flows, domestic funds have been the ones driving the slowing. The data suggests that outflows of Canadian-oriented funds have faced nearly $3.5 bn yearto-date. But could this be a case of selling at the bottom? True, there aren’t many positive catalysts to point for the Canadian growth landscape. But somewhat more attractive valuations, combined with a pick-up in global growth come 2016, could favour the more cyclically oriented Canadian market next year. Canadian Investors Rotating Toward US and Int’l Stock Funds 4.0 Net Sales excl. Re-invested Dist. (YTD through April, C$ bn.) 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 -4.0 6 Domestic Int'l Equity U.S. Equity Sector Equity Equity 2015 2014 2013 Source: IFIC, CIBC CIBC World Markets Inc. The Week Ahead—June 1-5, 2015 Currency Currents Royce Mendes BoC Pushing Back Against Loonie’s Rebound Loonie’s Correlation With Oil Could be Overdone If you like the outlook for oil, should you be similarly enthusiastic on what lies ahead for the Canadian dollar? In conjunction with the rebound in oil prices, markets temporarily looked more favourably on the C$. But the Bank of Canada’s statement on Wednesday suggests it’s concerned that the drag from a stronger loonie might more than offset some of the positive effects of higher oil prices. As a result, the BoC could take the wind out of the CAD sails by remaining more dovish on interest rate settings. That could undermine the loonie’s correlation with oil prices ahead. 0.7 CAD and WTI 6-month Correlation 0.6 0.5 0.4 0.3 0.2 0.1 0 -0.1 2013 2014 2015 Source: Bloomberg, CIBC Core CPI Stands Tall in Face of USD Strength Falling Import Prices Have Not Taken Core CPI With Them With the US dollar resuming its march higher, some market commentators fear that its strength will pull inflation further away from the Fed’s target. But the dollar is appreciating because the US economy is expected to outperform its peers. As a result, the domestic economy is creating more than enough inflation to outweigh the effects of a stronger dollar. For example, while prices of imported durable consumer goods have languished during this period of USD strength, core inflation continues to provide FOMC voters reasons to raise rates later this year. % Durable Consumer Goods Import Prices Core Inflation 3.0 2.0 1.0 0.0 -1.0 -2.0 Source: BEA, BLS, CIBC Currency Wars Rage On Policymakers in EM countries have been trying to label QE programs as a form of currency wars for years now. Even though the Fed is no longer in the QE game, not much has changed now that the ECB and BoJ are the big players. Since the beginning of December (around the time hints were being dropped about possible QE in the Eurozone), the Indian rupee has appreciated almost 10% versus the euro. Over that same time, the value of India’s exports denominated in USD have decreased by 15% (while the USDINR exchange rate has remained in a tight range). To be sure, this is not all the result of a weaker EUR, but India’s textile export industry is susceptible to swings in the currency. As the currency war rages on, further interest rates cuts from the RBI may be necessary to restore India’s competitiveness. ECB Bond Buying Has Hurt Indian Exports 10 Change Since the Beginning of December 2014 (%) 5 0 -5 -10 -15 7 INR EUR Indian Exports Source: Bloomberg, CIBC CIBC World Markets Inc. The Week Ahead—June 1-5, 2015 CANADIAN RELEASE AND EVENT DATES May/June 2015 MONDAY TUESDAY 25 WEDNESDAY 26 THURSDAY 27 Bank of Canada Interest Rate Announcement 1 2 28 BALANCE OF INT’L PAYMENTS 8:30 AM CURR. ACCT. BAL. $BN(QR) $BN(AR) 14:Q3 -9.0 -36.1 14:Q4-13.1 -52.2 15:Q1-17.5 -69.9 INDUSTRIAL PRICES 8:30 AM M(NSA) Y FEB 1.8-1.4 MAR 0.2-1.8 APR -0.9-2.4 QUARTERLY FINANCIAL STATISTICS 8:30 AM 4 3 INTERNATIONAL RESERVES 8:15 AM $BN $BN CHANGELEVEL MAR 2.91377.7 APR 0.16277.8 MAY MERCHANDISE TRADE 8:30 AM $MN 12 MO. BALANCE FEB-2,215 -81 MAR -3,019-4,350 APR 8 FRIDAY 9 10 HOUSING STARTS 8:15 AM 000’s (AR) TOTAL SINGLES MAR190 52 APR182 58 MAY IVEY PURCHASING MANAGERS’ INDEX 10:00 AM 29 NATIONAL ACCTS 8:30 AM REAL PRICE GDPDEFLATOR %ch AR %ch AR 14:Q33.2 1.1 14:Q42.2 -1.8 15:Q1-0.6 -2.1 GDP BY INDUSTRY 8:30 AM (2002$) GDPIND.PROD. MM JAN-0.2-0.3 FEB-0.1-0.7 MAR-0.2 -1.2 PAYROLL EMPLOYMENT, EARNINGS & HOURS 8:30 AM 5 LABOUR FORCE SURVEY 8:30 AM AVG EMPLOYUNEMP HRLY (HSHOLD) RATEEARN MY%Y MAR 0.20.8 6.81.9 APR -0.10.8 6.82.4 MAY LABOUR PRODUCTIVITY 8:30 AM 11 BUSINESS CONDITIONS SURVEY 8:30 AM 12 CAPACITY UTILIZATION 8:30 AM LEVEL (%) TOTALMANUF. 14:Q383.2 83.4 14:Q483.6 83.7 15:Q1 BUILDING PERMITS ($) 8:30 AM M M (RES)(NON-RES) FEB 2.2-5.0 MAR 6.622.1 APR NEW HOUSING PRICE INDEX 8:30 AM Bank of Canada Governor Poloz & Sr Dep Gov speak after Financial System Review @ 11:15 AM ET 15 SURVEY OF MANUFACTURING 8:30 AM SHIPMENTS M Y FEB -2.2-2.4 MAR 2.90.3 APR 22 16 INT’L TRANSACTIONS IN SECURITIES C$BN, NET 8:30 AM BONDS MONEY S TOCKSTOT MARKET FEB 9.9 -2.21.69.4 MAR21.0 -5.3 6.8 22.5 APR 17 18 WHOLESALE TRADE 8:30 AM 19 RETAIL TRADE 8:30 AM (Current$) MY FEB 1.52.4 MAR 0.73.1 APR CONSUMER PRICE INDEX 8:30 AM M(NSA) Y MAR 0.71.2 APR -0.10.8 MAY 23 24 25 26 PAYROLL EMPLOYMENT, EARNINGS & HOURS 8:30 AM All data seasonally adjusted except where noted “NSA”. M: per cent change from previous month. Q: per cent change from previous quarter at annual rates. Y: per cent change from year earlier. AR: Annual Rate. YTD: Year to date. Release dates are provided by sources outside CIBC World Markets Inc. Dates are subject to change. Sources for historical data: Statistics Canada, CMHC, Human Resources Development Canada and the Bank of Canada. 8 CIBC World Markets Inc. The Week Ahead—June 1-5, 2015 U.S. RELEASE AND EVENT DATES May/June 2015 MONDAY TUESDAY 25 MEMORIAL DAY (HOLIDAY) (Markets Closed) WEDNESDAY 26 THURSDAY 28 27 DURABLE GOODS ORDERS 8:30 AM M Y FEB -3.5-3.2 MAR 5.1-0.7 APR -0.5-2.3 FRIDAY S&P/CASE-SHILLER HOUSE PRICE INDEX 9:00 AM CORPORATE PROFITS 8:30 AM NEW HOME SALES 10:00 AM 2-Yr NOTE AUCTION 5-Yr NOTE AUCTION CONSUMER CONFIDENCE 10:00 AM BOT (9:00) REDBOOK (8:55) 2 1 PERS. INC & OUT. 8:30 AM SAVING INCOMECONS RATE M MAR FEB0.40.25.7 MAR 0.00.45.3 APR ISM MFG SURVEY 10:00 AM COMP. PRICES INDEXINDEX MAR APR MAY 51.539.0 51.540.5 2,5,7-Yr NOTE SETTLEMENT FACTORY ORDERS 10:00 AM M(SA) Y(NSA) FEB -1.0-6.5 MAR 2.1-5.3 APR LIGHT VEHICLES SALES MIL (AR) Y MAR 17.0543.8 APR 16.4613.1 MAY 7-Yr NOTE AUCTION GOODS & SERV. BALANCE (BOP) $B 8:30 AM GDS SERV TOT FEB -55.7 19.8-35.9 MAR -70.6 19.2-51.4 APR ISM NON-MFG SURVEY 10:00 AM Beige Book 3, 10-Yr NOTE ANNOUNCEMENT 3-Yr BOND ANNOUNCEMENT 10 TREASURY BUDGET 2:00 PM 10-Yr NOTE AUCTION BOT (9:00) REDBOOK (8:55) 17 HOUSING STARTS 8:30 AMMIL (AR) M MAR0.944 4.9 APR 1.13520.2 MAY 11 22 EXISTING HOME SALES 10:00 AM 12 PPI 8:30 AM M (SA) Y (NSA) MAR0.2 -0.8 APR-0.4 -1.3 MAY BUSINESS INVENTORIES 10:00 AM 30-Yr BOND AUCTION MICHIGAN SENTIMENT (P) 9:55 AM 18 CPI M(SA) Y (NSA) MAR0.2 -0.1 APR0.1 1.2 MAY CURRENT ACCOUNT BAL. 8:30 AM 19 LEADING INDICATOR 10:00 AM FOMC Rate Decision NET CAPITAL INFLOWS TICS 4:00 PM CONSUMER CREDIT 3:00 PM RETAIL SALES 8:30 AM M Y MAR 1.11.7 APR 0.00.9 MAY 8:30 AM CAPACITY UTIL/ IND. PROD. 9:15 AM LEV M Y MAR 78.6-0.3 2.3 APR 78.2-0.3 1.9 MAY 5 EMPLOY. SITUATION 8:30 AM NON- CIVAVG FARMUNEMP HRLY PAYROLL RATE EARN (000s)M % Y MAR855.51.9 APR 2235.41.9 MAY INITIAL JOBLESS CLAIMS (8:30) 16 15 4 NON-FARM PRODUCTIVITY 8:30 AM Q/Q (AR) Y/Y 14:Q4 (R) -2.1 -0.1 15:Q1 (P) -1.9 0.6 15:Q1 (R) CHICAGO PMI 9:45 AM MICHIGAN SENTIMENT (F) 9:55 AM INITIAL JOBLESS CLAIMS (8:30) 9 3-Yr NOTE AUCTION INITIAL JOBLESS CLAIMS (8:30) 3 ADP SURVEY 8:15 AM BOT (9:00) REDBOOK (8:55) 8 29 GDP 8:30 AM (AR) REAL IMPLICIT GDPDEFLATOR 14:Q4(F)2.2 0.2 15:Q1(P)-0.7 -0.1 Fed Chair Yellen speaks BOT (9:00) REDBOOK (8:55) 23 DURABLE GOODS ORDERS 8:30 AM M Y MAR 5.1-0.7 APR -0.5-2.3 MAY NEW HOME SALES 10:00 AM 2-Yr NOTE AUCTION PHILADELPHIA FED INDEX 10:00 PM 2,5,7-Yr NOTE ANNOUNCEMENT INITIAL JOBLESS CLAIMS (8:30) 24 GDP 8:30 AM (AR) REAL IMPLICIT GDPDEFLATOR 14:Q4(F)2.2 0.2 15:Q1(P)-0.7 -0.1 15:Q1(F) CORPORATE PROFITS 8:30 AM 5-Yr NOTE AUCTION BOT (9:00) REDBOOK (8:55) 25 PERS. INC & OUT. 8:30 AM SAVING INCOMECONS RATE M MAR MAR 0.00.45.3 APR MAY 26 MICHIGAN SENTIMENT (F) 9:55 AM 7-Yr NOTE AUCTION INITIAL JOBLESS CLAIMS (8:30) All data seasonally adjusted except where noted “NSA”. M: per cent change from previous month. Q: per cent change from previous quarter at annual rates. Y: per cent change from year earlier. AR: Annual Rate. YTD: Year to date. Release dates are provided by sources outside CIBC World Markets inc. Dates are subject to change. Sources for historical data: U.S. Department of Commerce, U.S. Department of Labor and U.S. Federal Reserve Board. 9 CIBC World Markets Inc. The Week Ahead—June 1-5, 2015 This report is issued and approved for distribution by (a) in Canada, CIBC World Markets Inc., a member of the Investment Industry Regulatory Organization of Canada, the Toronto Stock Exchange, the TSX Venture Exchange and a Member of the Canadian Investor Protection Fund, (b) in the United Kingdom, CIBC World Markets plc, which is regulated by the Financial Services Authority, and (c) in Australia, CIBC Australia Limited, a member of the Australian Stock Exchange and regulated by the ASIC (collectively, “CIBC”) and (d) in the United States either by (i) CIBC World Markets Inc. for distribution only to U.S. Major Institutional Investors (“MII”) (as such term is defined in SEC Rule 15a-6) or (ii) CIBC World Markets Corp., a member of the Financial Industry Regulatory Authority. U.S. MIIs receiving this report from CIBC World Markets Inc. 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