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Economic Calendar - Top 5 Things to Watch This Week

Economy Jun 07, 2020 07:05AM ET
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© Reuters.

By Noreen Burke

Investing.com - The main focus this week will be on Wednesday’s Federal Reserve meeting, with investors on the lookout for clues on how much more, if any, stimulus may be needed. The U.S. calendar also features data on CPI, jobless claims and consumer sentiment. Investors will continue to monitor the steepening yield curve amid a selloff in U.S. bonds. In the euro zone, European Central Bank head Christine Lagarde will likely offer more insights into last week’s larger than expected increase in its stimulus program. Concerns over Chinese growth could also be on the radar after weak trade data on Sunday. Here’s what you need to know to start your week.

  1. Fed meeting

The U.S. central bank's monetary policy announcement on Wednesday will be the first since April when Fed Chair Jerome Powell said the U.S. economy could feel the weight of the economic shutdown for more than a year.

Investors will be keen to hear the Fed's views on the economic outlook in the wake of Friday’s U.S. employment report which showed that the economy unexpectedly added jobs in May after suffering record losses in the prior month.

The report offered the clearest signal yet that the worst of the downturn triggered by the coronavirus crisis is probably over, fueling a rally in stocks and a selloff in Treasuries.

  1. Steepening yield curve

Friday’s U.S. jobs report added fuel to a dramatic sell-off in U.S. government bonds from their recent record highs, pushing the yield curve to its steepest level since March.

The steepening -- when longer-dated yields rise faster than short-dated ones -- signals a brighter growth outlook. But too fast a rise in borrowing costs can strangle the economic recovery.

While the Fed could introduce yield-curve control measures to target short-term rates, fund managers say they expect yields will need to rise significantly to justify any intervention in the bulk of the curve. Instead, they are watching for hints that the central bank believes the economic rebound can support the rise in yields.

  1. U.S. economic data

This week’s calendar also features updates on U.S. jobless claims, a key indicator of the health of the economy, along with consumer price inflation and consumer sentiment.

Claims have declined since hitting a record 6.8 million in late March, falling below 2 million last week for the first time since mid-March. The report suggested the worst is over for the labor market, combined with Friday’s nonfarm payrolls report.

Meanwhile, CPI should continue to ease given the lack of demand in the economy, while the University of Michigan’s consumer sentiment index should continue to rise amid the re-openings and rally in stock markets.

  1. Lagarde testimony, euro zone data

On Monday, ECB President Christine Lagarde will testify, via satellite link, before the European Parliament Economic and Monetary Affairs Committee. Lawmakers will have the opportunity to ask questions about the reasons behind the ECB’s larger-than-expected increase in its emergency bond buying stimulus program.

On the data front, Germany is to release industrial production data for April on Monday followed by France and the wider euro zone later in the week. Germany, the euro area’s largest economy, is facing the prospect of its deepest recession since World War Two as the coronavirus pandemic takes its toll, even though lockdown restrictions are now being eased.

  1. China growth fears

Chinese trade data on Sunday indicated that global demand for goods produced by the world’s second-largest economy remains weak.

Chinese exports contracted in May as global coronavirus lockdowns continued to devastate demand, while a sharper-than-expected fall in imports pointed to mounting pressure on manufacturers as global growth stalls.

The data could reinforce expectations that China may not have any growth this year. Investors will be watching to see how bullish stock markets will react as the unstoppable force of Chinese production runs into an impregnable global downturn.

--Reuters contributed to this report

Economic Calendar - Top 5 Things to Watch This Week
 

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Comments (15)
Pwr Strk
Pwr Strk Jun 08, 2020 2:37AM ET
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chicoms should pay $1,000,000 per victim dead or recovered they caused the world with their chinese virus
Steven ABI MANSOUR
Steven ABI MANSOUR Jun 07, 2020 6:15PM ET
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How about Eur/Usd will continue up or it will move down again?
Jack Cheung
Jack Cheung Jun 07, 2020 11:36AM ET
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oil companies are going to skyrocket this week with the Russian and three be Saudis working out a deal to extend their production pack.
Dan Bagley
Dan Bagley Jun 07, 2020 11:36AM ET
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I think you're right. Trying to figure out the best value oil play... thoughts?
Andy Ho
Andy Ho Jun 07, 2020 10:36AM ET
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so the article saying China will be weak or staying strong? seems saying weak but possible to be strong.
Ricky Yaliit
Ricky Yaliit Jun 07, 2020 10:29AM ET
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Will the European presidential speech cause an Impact this week?
Kaveh Sun
Kaveh Sun Jun 07, 2020 10:29AM ET
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No unless they review a surprise fiscal stimulus.
Jaber kheirkhah
Jaber kheirkhah Jun 07, 2020 10:28AM ET
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does anyone knows what will happen to Aud ?I seel Audchf and AudJpy and AudCad but I got -600$ till now and my trades on Aud is still open. I should close it or wait?
Kaveh Sun
Kaveh Sun Jun 07, 2020 10:28AM ET
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Aud moves mostly in gold direction. Gold is consolidated, therefore i expect aud to range bound for a while.
Chunkychee Chunkychee
Chunkychee Chunkychee Jun 07, 2020 10:16AM ET
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Since feds are pumping the market shouldn't you guys be riding along? It has risen 40% since the last drop! Yes crash is coming but it isn't that soon, probably next quarter due to risen Coronavirus and ensuing dampen demand.
Christopher Cole
Christopher Cole Jun 07, 2020 10:16AM ET
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100% on point. Ive started stacking long calls for cheap on short/bear ETFs. Sell EVERYTHING that isnt a short etf prior to Q2 earnings (starting mid July). Then a small rally will happen then Q3 will be the dagger to the heart of the market. Yes job numbers looked good but they where low income jobs returning to work. Higher paying jobs will begin layoffs ar the end of June when companies have met the PPP requirements.
RamSon hegde
RamSon hegde Jun 07, 2020 10:13AM ET
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which stocks you are all talking about here? can you please suggest some stocks to monitor for buying?
Sayed Ibrahimi
Sayed Ibrahimi Jun 07, 2020 10:13AM ET
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Nio
Robert DZ the patterns
Robert DZ the patterns Jun 07, 2020 10:13AM ET
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QYLD
Kaveh Sun
Kaveh Sun Jun 07, 2020 10:13AM ET
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If ur time frame is years, look for good,beaten down companies. Lots of oil companies r dirt cheap. They will come back in a year or 2.
Dave Stockman
Dave Stockman Jun 07, 2020 10:12AM ET
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Fed's Juice 20 Billion for the week - only 2 Billion on Monday... 3.5 Billion on Tuesday, 6.5 Billion on Weird Wollie Wednesday - finish at the highs that day, meaning a low on Friday of OE, 4 Billion on Thursday and Friday. https://t.co/D1SArp3Od8
Robert DZ the patterns
Robert DZ the patterns Jun 07, 2020 9:58AM ET
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And the Fed's pump. Why do I always have to remind that.
Warren Nugget
Warren Nugget Jun 07, 2020 9:58AM ET
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What pump?
 
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