The Week Ahead: The Fed and Earnings Will Be in Focus
Key data for the week ahead
While investors are likely to remain focused on corporate earnings in the week ahead, there are a few economic data releases and the Fed’s meeting scheduled. With no expected tail risk or political disturbances, this week’s journey is expected to remain close to normal. Corporate earnings will drive the performance of US indexes (SPY) (QQQ), with big tech names scheduled to report earnings this week. Expectations for these companies remain high and positive earnings could drive US indexes to new peaks.
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The Fed’s decision to be in focus
Investors and traders in the bond (BND) and currency (UUP) markets will focus on the Fed’s two-day meeting, which begins Tuesday. It will be a statement-only meeting, meaning there will not be any press conference following the meeting. Rate change decisions are usually not made at statement-only meetings, and the Fed has not been hinting at a rate hike before December of this year. Traders eagerly await any news about proposed trimming of the Fed’s balance sheet. If the trimming were to happen, the impact would likely be minimal, as the Fed has laid out a plan to trim slowly. The Fed’s outlook for the economy and inflation (TIP) after the recent stream of disappointing data will also be of interest.
Other important economic data for the week
The second-quarter US GDP estimate is due to be published on Friday, and existing home sales, new home sales, consumer confidence, and core durable goods order data is also due. Purchasing managers’ index data from Europe (VGK) and the UK (FXB) GDP estimate for the second quarter should also be watched for.
Overall market sentiment is expected to remain optimistic, and volatility is likely to remain low this week. The only risk to this outlook would be US companies reporting negative earnings.