Stocks opened slightly higher with the Fed and trade in focus. Here are the headlines getting the most attention to start the week. First, U.S. Commerce Secretary Wilbur Ross is talking down expectations for a U.S.-China breakthrough at the G20 Summit next week. Second, public hearings begin this week regarding the next round of U.S. tariffs on Chinese goods. Third, China has reiterated it is prepared for a protracted trade war. Fourth, consensus is calling for the removal of the word “patience” from the statement and no rate cut at this week’s Fed meeting. And fifth, Iran is enriching uranium, keeping geopolitical risk in focus.
A potential rate cut may give stocks a lift. Stocks have benefited from increasing hopes of a Fed rate cut recently, pulling the S&P 500 Index to within 2% of its record high set on April 30. On June 4 Fed Chair Jay Powell signaled a possible cut by saying “we will act as appropriate to sustain the expansion,” and since then the S&P 500 is up 5.4%. The central bank’s verbal pivot, partly a response to trade tensions, has markets aggressively pricing in a rate cut in July. Will a July rate cut give stocks a boost? It depends on where we are in the business cycle, as we discuss in this week’s blog and Weekly Market Commentary due out later today.
Setting the stage. We’re not expecting the Fed to change its policy rate at this week’s meeting, but we’re watching for policymakers to address plans for a rate adjustment through a change in language and economic projections. We’ll outline our expectations for the upcoming Fed meeting in this week’s Weekly Economic Commentary.
The week ahead. The main event this week is the two-day Fed meeting, which will conclude with a policy announcement and post-meeting press conference on June 19. Policymakers are scheduled to provide updated rate and economic projections at the conclusion of the meeting. The Bank of Japan and Bank of England will also meet this week, and Markit is scheduled to release preliminary manufacturing data for several global regions. Track these and other important events on our Weekly Global Economic & Policy Calendar.
- Empire Manufacturing (Jun)
- Housing Starts (MoM, May)
- Building Permits (MoM, May)
- Eurozone Trade Balance (Apr)
- Eurozone CPI Report (May)
- Japan Trade Balance (May)
- Japan Exports (May)
- Japan Imports (May)
- Federal Reserve Rate Decision (Jun)
- Bank of Japan Rate Decision (Jun)
- Initial Jobless Claims (Jun 15)
- Leading Index (MoM, May)
- Eurozone Consumer Confidence (Preliminary, Jun)
- Japan CPI Report (May)
- Nikkei Japan Manufacturing PMI (Preliminary, Jun)
- Markit US Manufacturing PMI (Preliminary, Jun)
- Markit US Services PMI (Preliminary, Jun)
- Existing Home Sales (MoM, May)
- Markit/BME Germany Manufactruring PMI (Preliminary, Jun)
- Markit Eurozone Manufacturing PMI (Preliminary, Jun)
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