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Top 5 Things to Watch in Markets in the Week Ahead

EconomyJun 20, 2021 07:20AM ET
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© Reuters

By Noreen Burke

Investing.com -- The Federal Reserves signal that interest rate hikes could come sooner than expected is expected to dominate market sentiment in the coming week and likely the months ahead as market participants digest the hawkish shift in policy guidance. As a result, an appearance by Fed Chair Jerome Powell before Congress on Tuesday will be in focus, as will comments by several other Fed officials during the week. Friday’s data on personal income and spending will be closely watched as it contains the core PCE price index, which is rumored to be the Fed’s favorite measure of inflation. Stock markets traded lower last week, with value stocks in particular taking a hit and this pattern looks set to continue, in the short term at least. In the UK, the Bank of England meets on Thursday with markets on the lookout for new rate hike clues. Here’s what you need to know to start your week.

  1. Hawkish Fed shift

The Fed surprised markets last week when it projected two potential rate hikes in 2023, sooner than markets had anticipated and signaled that it was also reaching the point where it could begin talking about tapering its $120 billion a month stimulus program.

The shift in guidance was underlined when St. Louis Fed President James Bullard said on Friday that a move towards faster tightening of monetary policy was a "natural" response to economic growth and rising inflation as the economy reopens in the wake of the coronavirus pandemic.

The question of whether stronger than expected inflation would prompt the Fed to act sooner had already been hanging over financial markets in the run up to the policy meeting.

Now more uncertainty may be on the way ahead of the central bank’s next meeting in July and its annual conference in Jackson Hole, Wyoming, in late August, where it could announce more details of its tapering plans.

  1. Powell testimony

Market participants will be closely watching comments by Fed Chair Jay Powell on Tuesday when he is due to testify, via satellite link, on the Fed’s emergency lending programs and current policies before the House Select Subcommittee on the Coronavirus Crisis.

In addition, several other Fed officials are due to make appearances during the week and their comments will also receive a lot of attention as markets look for fresh cues on the future direction of monetary policy.

New York Fed head John Williams and St. Louis Fed President James Bullard are both set to speak on Monday, while Cleveland Fed President Loretta Mester and San Francisco Fed President Mary Daly both speak on Tuesday.

Other Fed speakers during the week include Atlanta Fed President Raphael Bostic and Boston Fed President Eric Rosengren.

  1. Stock market slide

U.S. stocks ended sharply lower on Friday, with the Dow and S&P 500 recording their worst weekly performances since late October and late February, respectively. The tech-heavy Nasdaq index also ended lower.

The declines were marked by a slide in value stocks, a pullback in some commodity prices as well as a rally in the dollar and U.S. government bonds.

"I'm not surprised to see the market sell off a little bit. I'm never surprised, given the strong run we've had for such a long period of time, when you see some periods of profit-taking," Tim Ghriskey, chief investment strategist at Inverness Counsel in New York told Reuters.

"Next week, you will have various Fed governors give speeches, and we'll have the same thing: some governors will be more hawkish, and some will be more dovish, so you'll see some back-and-forth," Ghriskey added.

  1. Economic data

Investors will be paying close attention to the week’s upcoming economic data for clues on whether the recent surge in inflation - which saw consumer prices accelerate in May at the fastest rate in almost 13 years - is continuing.

Data on personal income and spending for May is due out on Friday, which contains the core PCE price index, supposedly the Fed’s favorite inflation gauge.

The economic calendar also features reports on new and existing home sales, durable goods orders, manufacturing and service sector activity and the weekly report on initial jobless claims, which is given close attention, given the uneven recovery in the labor market.

  1. BoE meeting

The Bank of England is set to hold its latest policy meeting on Thursday, the last for Chief Economist Andy Haldane.

Haldane is the sole advocate on the BoE’s monetary policy committee for reducing stimulus measures amid rising inflation. Inflation in the UK rose above its 2% target in May for the first time in two years.

Most analysts are not expecting any policy changes after the BoE last month said it would slightly reduce the weekly pace of its bond purchases. The recent decision by British Prime Minister Boris Johnson to delay the full economic reopening by a month could be seen as reason for policymakers to stick to their cautious stance.

But some analysts have not ruled out a discussion around tapering, particularly with other global central banks, notably the Federal Reserve, starting discussions on exiting crisis era stimulus measures.

--Reuters contributed to this report

 

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (21)
trevor hron
trevor hron Jun 21, 2021 3:49AM ET
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This is going to get uglier before it gets better. Things have been churning the last two weeks. It's tiime to go where the sun dont shine. It will be hotter than hades in the market this week. With all of the outflows over the last month nobody smart will be buying this. The correction just needs to happpen and it's already started. Everything is rated a sell. When they pull the rug tomorrow its going to be a long way down.
franklin neversoy
franklin neversoy Jun 20, 2021 10:15PM ET
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Japan. Down. - 1020 ugh we in tomorrow morning
Prajwal Gurung
Prajwal Gurung Jun 20, 2021 10:02PM ET
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Tomorrow is a green day then 🚀🚀🚀
franklin neversoy
franklin neversoy Jun 20, 2021 9:33PM ET
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Ugh ugh for tomorrow it’s bad already 🥴
john dislias
john dislias Jun 20, 2021 6:36PM ET
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Long to the moon
franklin neversoy
franklin neversoy Jun 20, 2021 4:03PM ET
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Obsessed with tightening talk no worries delta strain will stop this silly notion it’s worse than covid 19 be a revisit of 2019 stock up on toilet paper and food 😬😷
franklin neversoy
franklin neversoy Jun 20, 2021 3:59PM ET
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Selloff continues all the hawks will be pro tightiing on policy so much for futures a ****time
Poku Mhd
Poku Mhd Jun 20, 2021 1:26PM ET
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The markets have been running off of a low interest rate, stimulated high for too long. The markets NEED and inflation scare reality to stabilize them.
Alexander Brown
Alexander Brown Jun 20, 2021 1:26PM ET
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°°°°°°5}6°°°°°°°°°°°°°°°°°°°°°°°°°!°°°°!!!!°°°°°°°°°°°°°!°°°°°°°!!!!+aa A
Alexander Brown
Alexander Brown Jun 20, 2021 1:26PM ET
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°°°°°°5}6°°°°°°°°°°°°°°°°°°°°°°°°°!°°°°!!!!°°°°°°°°°°°°°!°°°°°°°!!!!+aa And9 At At 0
Phil Ht
Phil Ht Jun 20, 2021 12:38PM ET
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Powell buzz kill this week.
TL Chan
TL Chan Jun 20, 2021 12:15PM ET
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But, i advise momentum traders take a week off, don't ruin the market, be more useful this week, just take a holiday. Don't make the dynamic unnecessarily more complicated!
TL Chan
TL Chan Jun 20, 2021 12:12PM ET
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no worry ! The coming week is just the reinforcement of last week. The major part has already done last week. The Golden rule is "easing off, no surprise, but be prepared"!
Steve Uzor
Steve Uzor Jun 20, 2021 12:12PM ET
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so a bearish usd is expected ?
Jouni Matero
Jouni Matero Jun 20, 2021 12:12PM ET
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My guess is USD goes up while just about everything else goes down.
Leon Kelly
Leon Kelly Jun 20, 2021 12:12PM ET
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You know the crash is here when even Cramer soulless individual he is warns "Sell off will continue"..
sanchopanties chinaman
sanchopanties Jun 20, 2021 12:03PM ET
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america market will crash very soon
Ambika Katuwal
Ambika Katuwal Jun 20, 2021 11:49AM ET
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payinggame
CHADWICK RICHINGTON
CHADWICK RICHINGTON Jun 20, 2021 11:31AM ET
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All in GOLD and GOLD MINERS
New Jazenevd
New Jazenevd Jun 20, 2021 11:31AM ET
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Last week was disproportionally cruel to miners, both gold and industrial,  and some stocks were pushed down way too much.
Jouni Matero
Jouni Matero Jun 20, 2021 11:31AM ET
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And many Tech stocks up way too much
Steve Uzor
Steve Uzor Jun 20, 2021 11:31AM ET
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do you guys think gold is likely to fall this week ?
New Jazenevd
New Jazenevd Jun 20, 2021 11:31AM ET
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Steve Uzor  Gold is likely to recover some ground this week.
ablie bah
ablie bah Jun 20, 2021 10:54AM ET
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get ready for the coming week!
Collins Collins
Collins Collins Jun 20, 2021 10:54AM ET
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Hades!!
New Jazenevd
New Jazenevd Jun 20, 2021 10:29AM ET
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The market will recover next week, exclusively because of runaway money creation, pushing more liquidity to stocks. Talking heads can create local turbulence when they use the word “tapering” and nothing more than this small turbulence and hollow words.
Show previous replies (11)
Pavan Kumar
Pavan Kumar Jun 20, 2021 10:29AM ET
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correction may happen now...or Nasdaq hit 15000 & then crash till 9700 levels..mark my Words...
New Jazenevd
New Jazenevd Jun 20, 2021 10:29AM ET
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Pavan Kumar  Anything “may happen”, this is stock market. However, real correction, i.e. real 10% haircut, has little chance to happen. No tangible reasons for this. Government continues printing no n stop, this cash needs to be invested. Every market dip will be met with strong buying.
franklin neversoy
franklin neversoy Jun 20, 2021 10:29AM ET
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5:00 cst futures get bandages ready lots of blood 🩸
New Jazenevd
New Jazenevd Jun 20, 2021 10:29AM ET
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franklin neversoy  Dream on, buddy. You have at least a year to continue this dreaming.
trevor hron
trevor hron Jun 20, 2021 10:29AM ET
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New Jazenevd  There was absolutley no buying the dip Friday. That was Wed, Thur  Now will be turning the knife while its already stuck inside. Thre is no reason to stick around in this market.
Velly Mavuso
Velly Mavuso Jun 20, 2021 10:21AM ET
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How about usdjpy today
YoUnG You Tuber
YoUnG You Tuber Jun 20, 2021 10:13AM ET
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Ayurved Strong life
Ayurved Strong life Jun 20, 2021 10:04AM ET
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May be some trends change this week
Paschal Ngasa
Paschal Ngasa Jun 20, 2021 7:40AM ET
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what does this means to the USD
andy matalobos
andy matalobos Jun 20, 2021 7:40AM ET
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Absolutely nothing....specially financial news coming from a parasite island that has an over valued fiat currency that munches off from their enslaved colonies in order to provide wealth and financial support to an entire dysfunctional lazy Monarchy family.
 
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