Next week, the FOMC minutes and some economic reports will be released. According to analysts from Danske Bank, the FOMC minutes may give more insight into what the members think about the timing of the next Fed hike and quantitative tightening.
“In the US, we get the FOMC minutes from the May meeting on Wednesday, which may give us more insight into what the FOMC members think about the timing of the next Fed hike and not least quantitative tightening (however, notice that the meeting took place before Friday’s weak CPI inflation print). Also on Wednesday we get the preliminary Markit PMIs for May. Looking at the PMI services index, we think it has been on the weak side in recent months and expect it to increase from 53.1 in April to 54.0 in May. We expect that the manufacturing index fell slightly to 52.3 in May from 52.8.”
“On Friday look out for the preliminary core capex data for April, which will give us the first indication of whether the rebound in capital investments in Q1 has continued in Q2.”
“We also have several important data releases in the week after the next, which are going to be important for the Fed’s decision on whether to hike again next month or not. On Tuesday 30 May we get the PCE inflation data for April. After the weak CPI report last Friday we estimate that PCE core rose 0.1% m/m, implying a core inflation rate of just 1.4% y/y (a decline from 1.6% in March).”
“The jobs report for May due on Friday 2 June is also going to be important to the Fed’s decision on whether to hike in June or not, not least after the unemployment rate fell to 4.4% in April, the lowest in a decade. It is too early to provide a forecast as we are missing some data before we can make a qualified estimate.”