Happy Sunday! The week ahead promises no shortage of event volatility catalysts that could shake up the markets, whether we look at the economic, earnings, and even Treasury auction calendar.
Tuesday brings us the CB Consumer Confidence number, which will be interesting to watch as we've seen it declining, albeit not to the depths of UoM Consumer Sentiment. It'll also be interesting to watch New Home Sales.
Then on Wednesday we have the Fed policy decision, but before that Durable Goods. Fed Funds Futures are currently projecting an 80.5% probability of a 75 bps hike.
Meanwhile, a 100 bps hike is projected to have odds of 19.5%, something I don't think is likely, especially given that we're getting the Advance GDP number on Thursday as well as Unemployment Claims, both of which are likely to show a slowing economy, and possibly a technical recession for the former.
The Atlanta Fed GDPNow model is forecasting a quarterly contraction of -1.6% after we saw the Housing Census Bureau report report real residential investment growth decreased from -8.8% to -10.1%.
Then finally on Friday we get PCE, the Fed's favorite measure of inflation, and what they largely base their policy decisions off of insofar as the 'price stability' side of their mandate is concerned.
Earnings, meanwhile, are an absolute blitz of highly watched companies, including some of the biggest companies on Earth, like AAPL, AMZN, GOOGL, META, MSFT, and XOM. It will be very interesting to see what happens with the larger technology companies, many of whom face a host of headwinds from a slowing economy, rising costs, and an aggressive Fed causing increasing concern about a policy miscalculation.
Treasury auction calendar
The Treasury auction schedule will be busy as well, with hundreds of billions at auction. I will be watching the note auctions closely. Healthy demand there would be a sign to me that auction participants are beginning to become more sanguine with the trajectory of Fed policy and the velocity of inflation.
We've seen rates peak in early June, at least so far, with a pretty strong bid for Treasury notes (and longer dated US sovereign duration) since then. If this trend continues it would be a pretty healthy sign for risk assets, but the big question is "if."
Let's see what the week ahead brings!