COMMODITIES: Crude Edges Lower Ahead Of OPEC+ Meeting, Gold Declines

• The ECB’s seasonally adjusted HICP data for May saw services inflation pull back abruptly to 0.17% M/M from what had been a particularly strong 0.70% M/M.
• It saw 3M/3M momentum ease to 3.95% annualised from 4.10% in April.
• That’s comfortably above the 3.24% Y/Y but less worrying than a previous trend based on residual seasonality considering the previous similarities with last year’s momentum acceleration to a high of 5.2% in May 2024. 

Other analysts are largely leaning toward a hold but several note the "coin toss" nature of Wednesday's decision.

• Goldman and HSBC look for a cut, with ING seeing it as a "50/50 call".
• See below for a summary of expectations: 

• The two months of inflation data since the Apr 17 decision will have on balance boosted the ECB’s confidence that it remains on a disinflationary path.
• It has been bumpy though, with a strong uptick in services inflation in April although expectations that this was linked to the later timing of Easter this year have been supported by today’s (Jun 3) preliminary data for May.
• Specifically, services inflation shifted from 3.68% to 3.45% Y/Y in March (a negative Easter impact), known ahead of the ECB decision, before jumping to 3.98% Y/Y in April (positive Easter impact). Since then, latest data show a meaningful moderation to 3.24% Y/Y in May for a sizeable undershoot of the circa 3.5% expected by analysts ahead of last week’s national level data.
• Separately, non-energy industrial goods inflation was stable in May as expected, at 0.63% Y/Y after 0.57% April. Potential reallocation of China exports that would have gone to the US, may start to weigh on durable goods prices later in Q2 but there aren’t any clear signs of that happening just yet in the hard inflation data.