This Week’s Events are Sure to Keep Investors on Their Toes
I wouldn’t want to be Fed Chair Jerome Powell this week. The June 13-14 FOMC meeting may be the first meeting of the Committee that sets monetary policy, since January 2022, when a tightening of monetary targets doesn’t occur. The decision will come down to the wire as very important inflation data won’t be released until the first day of the meeting on Tuesday. While most on the Committee have expressed seeing current inflation data as problematic, there usually is a delay between when the Fed first alters policy, and the impact it creates.
Whether the Fed again acts to slow the economy, or takes a breather, announced at 2:00 on Wednesday, Powell will face reporters having to explain the Fed’s action or inaction. With likely less personal conviction than at previous press briefings, his responses may be more general than usual.
Monday 6/12
• 2:00 PM ET, The Treasury Statement is the U.S. Treasury’s release of a monthly accounting of the surplus or deficit of the government. Changes in the budget balance reflect Federal policy on spending and taxation. Forecasters see a $205.0 billion deficit in May that would compare with a $66.2 billion deficit in May one year ago, and a surplus of $176.2 billion in April this year.
Tuesday 6/13
• The June FOMC Meeting begins day one of two.
• 6:00 AM ET, NFIB Small Business Optimism Index has been below the historical average of 98 for the past 16 months in a row. May’s consensus is for a decline to 88.4 versus 89.0 in April.
• 8:30 AM ET, The Consumer Price Index this month could move markets significantly if there is a significant change in the data from the previous month. Core price increases in May are not expected to have slowed. They are expected to keep their pace of April’s 0.4 percent monthly increase. The core’s year-over-year rate is seen easing to 5.3 from 5.5 percent. Overall price increases are expected to halve to 0.2 percent on the month from 0.4 percent and 4.1 percent on the year from 4.9 percent.
Wednesday 6/14
• 8:30 PM ET, The Producer Price Index – Final Demand number is another important inflation index that the FOMC members may want to peak at before voting Wednesday on any policy shift. After rising 0.2 percent in April, producer prices in May are expected to fall 0.1 percent. The annual rate in May is seen at 1.6 percent versus April’s plus 2.3 percent. May’s ex-food ex-energy rate is seen up 0.2 percent on the month and up 2.9 percent on the year, matching April’s 0.2 percent monthly rise and just below the month’s 3.2 percent yearly rate.
• 10:30 AM ET, The Energy Information Administration (EIA) will be providing its scheduled weekly information on petroleum inventories, whether produced in the US or abroad. The level of inventories helps determine prices for petroleum products.
• 2:00 PM ET, The FOMC Announcement is when the world gets to learn what the Fed decision is on interest rates, and why.
• 2:30 PM ET, The FOMC Chair press briefing provides additional context to the just announced direction of the FOMC’s policy decision. The questions and answers with the media can shed far more light of the intentions of the Committee than the carefully worded statement released at 2PM.
Thursday 6/15
• 8:30 AM ET, Jobless Claims for the June 10 week are expected to ease back to 250,000 versus the prior week’s large 28,000 jobs jump to 261,000. This has been a very closely watched report. If as expected, it would indicate the Fed has room to tighten further if other data remain strong.
• 8:30 AM ET, May Retail Sales are expected to be unchanged, matching April’s 0.4 percent rise.
• 8:30 PM ET, The Philadelphia Fed (Philly Fed) manufacturing index has been in contraction for the last ten reports. At minus 10.4 in May, with June’s consensus is at minus 13.2.
• 9:15 PM ET, Industrial Production is expected to push 0.1 percent higher in May after April’s 0.5 percent increase that was boosted by manufacturing output which jumped a surprising 1.0 percent. Manufacturing in May is seen up 0.2 percent.
• 4:30 PM ET, The Fed’s Balance Sheet is a weekly report presenting a consolidated balance sheet for all 12 Reserve Banks that lists factors supplying reserves into the banking system and factors absorbing reserves from the system. This has ben getting more attention as it indicates if the fed is on track with its announced quantitative tightening and if any bank borrowing has dramatically increased.
Friday 6/16
• 10:00 AM ET, Consumer Sentiment will be the first indication for June. It fell by 4.3 points to 59.2 last month, it is expected to inch up and report 60.5.
• Quadruple Witching is a phrase used to refer to the expiration of four different derivative contracts: Stock index futures, Stock index options, Single-stock options, Single-stock futures. Quadruple witching happens four times a year, on the third Friday of March, June, September, and December. It is a time of heightened volatility in the markets, as traders adjust their positions in anticipation of the expiration of these contracts.
What Else
The key factors that the Fed will consider when making its decision are the pace and trend of economic growth, the level of inflation, the strength of the labor market, and the risk of recession.
Additionally, the FOMC will have to determine if the moves to date will have a more substantial impact if allowed to have more time to have an impact.
While OPEC is cutting output and it seems like we are on a path of oil and natural gas prices again inching up, Alvopetro Energy (ALVOF), an enviable gas company, headquartered in Canada, operating in Brazil, will be conducting roadshows in New York and St. Louis. Learn more about attending here.
Paul Hoffman
Managing Editor, Channelchek