U.S. letter for week beginning May 30
Last week, the U.S. economics agenda was set by the statements of Fed officials.
Several Fed officials, including Chair Janet Yellen, signaled that the next interest rate hike might come in the next few months.
“It’s appropriate as I have said this in the past for the Fed to gradually and cautiously increase our overnight interest rate over time,” Yellen said, adding “and probably in the coming months such a move would be appropriate.”
Some central bankers, such as New York Fed President William Dudley and Fed Governor Jerome Powell, highlighted the risks that the EU referendum in the U.K. might pose to global markets and hence argued in favor of "caution" as June’s policy meeting approaches.
Another important development last week was the upward revision in the GDP data for the first quarter. The U.S. Department of Commerce revised the GDP growth from 0.5 percent to 0.8 percent. The market expectations for the second estimate was a 0.9 percent increase.
- This week: U.S. employment, inflation data, European Central Bank (ECB) & OPEC meetings
This week, the markets will focus on the U.S. employment report for May and the Fed's preferred inflation indicator, the PCE index. Both releases will play a critical role for the market’s expectation for and likelihood of a Fed rate hike.
The PCE index will be announced on Tuesday with Personal Income and Spending.
On Friday, the U.S. Labor Department will announce the non-farm employment, unemployment, wage growth and labor force participation rate.
Markets will also be keeping a close eye on ECB and OPEC meetings, Chinese manufacturing data, and speeches by regional Fed presidents.