The Week Ahead

This week, the focus will be on a slew of Fed-speak, as well as the May FOMC meeting minutes?released mid-week.?

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On the heels of the latest – uneven – inflation reports last week, this week there are a number of Fed officials slated to take the stage yet again including Atlanta’s Bostic, Governor Barr, Fed Vice Chair Philip Jefferson, Richmond Fed President Thomas Barkin, and New York’s John Williams.

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Additionally from the Fed, on Wednesday, the May 1 FOMC meeting minutes will be released. While the Fed remains focused on eventual rate cuts, investors will be looking for any indications of a consideration of a less favorable scenario. Is the Fed even considering the possibility of inflation remaining elevated or worse pushing higher still? At what point is the Fed willing to not just delay rate cuts, but potentially consider reengaging with additional rate hikes? In May, Powell was given ample opportunity to reintroduce the possibility of rate hikes, but he did not take the bait at any turn.?

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Aside from Fed commentary, the economic calendar also begins on Wednesday with weekly mortgage applications, along with April existing home sales. Last month, existing home sales fell 4.3% in March to a 4.2M unit pace, a two-month low. Year-over-year, existing home sales fell 4.3% in March, the largest annual drop since September and marking the 32nd consecutive month of decline. This month, existing home sales are expected to rise 0.6% in April to a 4.22M unit pace on the heels of a 3.4% rise in pending home sales last month, typically a leading indicator of the existing market activity.?

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Later in the week on Thursday, weekly jobless claims, along with more housing data – the new home sales report for April – will be released. New home sales jumped 8.8% in March from 637k to 693k, the highest level since September. Over the past 12 months, new sales increased 8.3%, the strongest annual gain in five months. This month, however, new home sales are expected to decline 2.1% in April to a 679k unit pace.

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Also on Thursday, the preliminary S&P Global reports for manufacturing, services and the composite PMIs, along with the Chicago Fed National Activity Index for April, and the Kansas City Fed Manufacturing Activity Index for May.

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And wrapping up the week, on Friday, the April durable goods orders report. This month, durable goods orders are expected to fall 0.7% in April. Excluding transportation, however, orders are expected to increase 0.1%.

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Finally, on Friday, the final May reading of consumer sentiment from the University of Michigan is likely to be revised slightly higher from 67.4 to a 67.7 in the final May report.?Facing limited downside for the month, as consumers remain concerned about inflation and conditions in the labor market, there appears to be a cap on the upside momentum for now as well.

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-Lindsey Piegza, Ph.D., Chief Economist