We can’t get anything passed him at this point
We start off the 2nd half of the year with a shortened trading week for the 4th of July holiday. On the economic front, we have Manufacturing PMI, the Unemployment Rate, Non-Farm Payrolls and Average Hourly Earnings.
Non-Farm Payrolls & Unemployment Rate: Non-Farm Payrolls, the Unemployment Rate and Average Hourly Earnings for June are scheduled to be released this Friday (7/7). Should the figure show that the economy created more jobs than expected, or if average hourly earnings jumped higher, we will likely see the markets go higher, the US Dollar go higher and oil go lower. Should these numbers disappoint, the markets will likely go lower along with the US Dollar.
Illinois: So after decades of mismanagement and epic cronyism of the state budget and Ponzi scheme (ahem state pension), Illinois has the chance of becoming the first state to declare bankruptcy. If they were to default, muni markets across the country could potentially feel the ramifications with yields spiking higher. Bond investors will be keeping a close high as to how negotiations for the state’s budget end up. As of this writing, the state has not come to an agreement and the ratings agencies have held off a downgrade for the time being to see how the negotiations go.
Government Bond Yields: Back on Tuesday (6/27) Super Mario Draghi said “Deflationary forces have been replaced by reflationary ones.” The reaction in the bond market was immediate. Within a few days we saw yields on government debt spike. In a 1 week period, the US govt 10 year yield jumped (in % change terms) over 5% while German govt. 10 year yields jumped (in % change terms) 77%. Investors will watch to see if bond yields continue to climb higher, helping bank stocks and pushing gold lower.
Holiday, Celebrate: Markets will be closed in the US on Tuesday (7/4) for Independence Day. US markets will also be closing early on Monday (7/3) ahead of the holiday so Americans can sit in bumper to bumper traffic on their way to the beach and BBQ’s. Markets in Canada will also be closed on Monday (7/3) for Canada Day (very original name, atleast we don’t have America Day). When trading does resume, expect volumes to be lower for the remainder of the week as traders and quants are still recovering from their hangovers and fireworks injuries. Individual stocks could potentially see outsized moves if they have a lack of liquidity.
G20: After Trump likely drives on the greens (just like some unnamed guy in Iceland) of his own golf course but doesn’t get thrown off the course, Trump will meet with his idol, Russian President Vladimir Putin at the G20 meetings in Germany on Friday (7/7). Usually these meetings talk a big game but nothing ever develops. Investors will be watching for similar banter as the G 20 heads meet. Should we see some kind of economic agreement toward trade, we could see individual companies react from market headlines. If we hear about strengthening nationalistic stances or if Trump starts a trade war with China, we could see a tariff on steel imports sending US steel companies higher.
FOMC Meeting Minutes: 8:01, 8:02, 8:03. The latest Fed meeting minutes are scheduled to be released on Wednesday (7/5). Investors will be looking closely at the language of the minutes to see what may have changed from the previous FOMC meeting. Since we just had a rate hike at the last meeting, and we were given some details as to the timing of the unloading of the Fed’s balance sheet, their likely won’t be any market moving details in these minutes.
Chinese Data: This week, China will be releasing Manufacturing PMI and Caixin Service PMI. Investors will monitor the data and the Yuan’s reaction as weak data will put downward pressure on the currency, with the potential for markets to fall globally.
Manufacturing PMI: PMI readings from across the globe are also due out this week. Traders will watch these readings as potential weak readings could cause central banks to take further steps to stimulate their respective nation’s economies.
Monetary Policy Report: Tentatively scheduled for Friday (7/7, but could be Wednesday) at 11AM, the Federal Reserve will release its biannual monetary policy report. Discussion of monetary policy and economic developments in the report could see the US Dollar strengthen or weaken against a basket of currencies.
The latest on the NYC MTA: I’d like to thank the NY State Governor for declaring a state of Emergency for the MTA and announcing an additional spending of $1 Billion which nobody knows where it will go. Looking forward to the next quick fix before my fare goes up in a week another 10% for a 30% drop in service. Sounds like a win win for everybody.