The US gets ready for a holiday-shortened week. It’s an exciting period for macroeconomics, with the release of significant data that has the potential to reverse market sentiment. The Federal Open Market Committee (FOMC) will release its minutes on Wednesday. These files will provide indispensable clues to the nascent course of the central bank’s monetary policy. Save the date for Thursday! On Thursday, the second reading of the Gross Domestic Product (GDP) will be released. Then on Friday, picture this—Personal Consumption Expenditures (PCE) index and Michigan consumer sentiment data!
On the corporate side, it’s another big week with tech behemoth Nvidia scheduled to report on Wednesday. This announcement comes at an incredibly opportune time. President Trump’s threats to impose 25% tariffs on many popular technology products have investors and analysts alike concerned about the potential impact. The administration’s trade stance has created a tense atmosphere, with Trump warning of a potential 25% levy on smartphones and a sweeping 50% tariff against European Union imports. The rollout of the latter has continually been delayed, with the deadline extended from June 1 to July 9.
In early Asian trading, US equity futures were up only a touch after Trump’s last-minute announcement. So far this year, the markets have experienced extreme volatility. Quickly evolving narratives have the bond market fluctuating greatly in either direction. Despite the prospect of inflationary pressures from ongoing supply chain constraints, analysts say the market may be overreacting. They caution that with trade tensions upending the global economy, fiscal risks in the US are increasing.
The months of ongoing trade uncertainty have recalibrated expectations so that tariffs are no longer an outlier. Current cross-asset pricing indicates that the anticipated resolution of these tariff disputes will likely result in rates settling in the low teens, significantly lower than the initially threatened 20-50%. The S&P 500 index is currently indicating an implied move of 2.07%. This figure illustrates the market’s increasing sensitivity to unforeseen economic data and trade news.
As the week progresses, traders will remain especially focused on these economic signals. They’ll be especially interested in how these elements could impact domestic and international markets. The expected release of FOMC minutes could provide clarity on the Federal Reserve’s stance amidst rising inflation and economic recovery challenges. Additionally, the second GDP read will offer a comprehensive view of economic growth, while PCE and Michigan sentiment data will shed light on consumer behavior and spending patterns.