US: Key events for next week - Danske Bank

Analysts from Danske Bank, point out that there is a heavy week ahead in terms of economic data in the US, including the FOMC meeting on Wednesday. According to them, the Fed will not rise rates. 

Key Quotes: 

“The most important event of the week will be the FOMC meeting on Wednesday. Note that this is one of the big meetings with press conference and new ‘dots’. Although the market has priced in a June hike and consensus estimates are also in favour of a hik, we are more sceptical given economic data has weakened recently. Both actual inflation and inflation expectations have come down significantly, and the latest labour market report also disappointed on the downside. We stick to our call that the Fed will postpone the hike until July and instead make a big announcement on quantitative tightening (QT). We do recognise that the expectations in the market of a June hike may have pushed the Fed into a corner, as expectations have weighted on the Fed’s decisions previously. If the Fed hikes at the June meeting, we do not expect a major announcement of QT.”

“Next week also brings CPI figures for May due to be released on Wednesday. CPI and CPI core have been falling rather rapidly since they peaked in February. We estimate CPI increased 0.0% m/m, implying 2.0% y/y, whereas CPI core increased 0.2% m/m and 1.9% y/y.”

“We are also due to receive a host of ‘soft’ data including preliminary University of Michigan Consumer Confidence for June on Friday, NFIB small business optimism for May on Tuesday, Empire manufacturing PMI on Thursday and Philly Fed index on Thursday. Consumer confidence remains at very high levels, which should be supportive for consumer spending. However, recently this relationship has seemed relatively weak and we do not expect the retail sales control group figures for May released on Wednesday to come out much different from their growth rates over the past few months (around 0.2% m/m). Although PMIs have come down over the past couple of months, the Fed Philly index and NFIB are still at very high levels and hence we would not be surprised if they come down.”

“A number of speeches by FOMC members are scheduled following the FOMC meeting.”