All eyes were on the Fed and inflation data last week, which did not disappoint. Inflation data showed to be moving in a positive direction and the Fed acted exactly as most expected. This was capped Thursday with the PPI coming in lower than expected and the market rocketing to new highs. The S&P 500 ($SPX) (SPY) closed the week up just over 1.5%
This week we have a rare mid-week holiday for the US markets as well as several news releases to watch as well as something that has the ability to affect all Dollar denominated assets.
Here are 5 things to watch this week in the Market.
Bank Holiday
Wednesday this week, Juneteenth is celebrated and the stock exchanges and US banks will be closed. This could cause some irregular liquidity and wider spreads Tuesday afternoon. Feeding into this also could be the fact that we are approach the Monthly option expiration this week.
Core Retail Sales
Given inflation data looks to be moving in a positive direction, this week we will see if retail sales confirm this. Many companies during earnings season were guiding lower due to slowing demand, if the retail sales report confirms this we could see the market start to slip on waning economic conditions. If we come out with a beat, then we could continue the rally from last week.
Flash PMI
Both the services and manufacturing PMI are out this Friday. These often cause some volatility in the market given the nature of the reports. These have been trending down in the past several months, but last month looked to be a reversal of this trend. If we see another beat in both of these reports we could see the market rally. If we are mixed or miss on both we could see the market stall or even sell off slightly.
G7 Meetings
The beginning of the week has the G7 meetings, which are a conference of leaders and central bankers from 7 of the industrialized nations. Similar to OPECmeetings, these are all held behind closed doors, but there are often impromptu press conferences between meetings as leaders talk to the reporters on site. Since these meetings often have larger impacts on monetary policy, and reports that come out for the G7 can cause some significant market volatility.
Petrodollar agreement
This technically happened last week, but could have implications in the weeks and months to come. The US-Saudi Arabia Petrodollar pact has officially come to an end. The agreement promised that dollar denominated assets were used the world over as oil was priced exclusively in US dollars. With this pact coming to a close, it could cause some volatility in both equities and bond markets if they begin to price oil in other currencies. This will of course create new opportunities, but will also potentially cause issues to how stable the dollar is.
Best of luck this week and don’t forget to check out my daily options article.
On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
