Market Outlook: May 13 – 17
- Fed members hinted at potential delays in rate cuts
- Unemployment Claims and Consumer Confidence fell short of expectations
- U.S. Key figures Releases likely to influence the monetary policy outlook
Highlights of Last Week’s Key Events in the U.S.
Last Week, Fed members such as Logan and Bowman mentioned that it is premature to consider rate cuts and indicated that they don’t foresee any warranted this year, hinting at potential delays.
Furthermore, both Unemployment Claims and Consumer Confidence data in the U.S. disappointed expectations. Unemployment claims registered at 231K, missing the 212K forecast and marking the highest level since November 2023. Prelim UoM Consumer Confidence actual data recorded 67.4, falling short of the expected 76.3, marking the lowest level since June 16, 2023.
However, Fed Chair Powel mentioned at the FOMC Press Conference that they will base their interest rate decisions on major U.S. data outcomes.
Crucial U.S. Data to Track This Week
The U.S. takes the spotlight for this week as it is set to release key figures, that could influence the outlook for the Federal Reserve monetary policy.
The Producer Price Index (PPI) data is scheduled for release on Tuesday, May 14, 2024, at 4:30 PM GMT+4 (Dubai Time), followed by the Consumer Price Index (CPI) on Wednesday, May 15, 2024, at 4:30 PM, GMT+4 (Dubai Time).
The PPI m/m, which measures the price levels from the perspective of producers, is projected to rise from 0.2% to 0.3%. If this scenario occurs or if the released figure surpasses 0.3%, it would signal inflationary pressures, potentially resulting in higher costs for consumers and likely strengthen the value of the U.S. Dollar.
The CPI y/y, which measures the price levels purchased by consumers, is anticipated to drop from 3.5% to 3.4%, signaling easing inflationary pressures. Inflation has been gradually decreasing closer to around the 2% healthy level, however, if the CPI resulted as 3.5% indicating stickiness or higher, then this will most probably delay rate cuts and increase the value of the U.S. Dollar.
Fed Chair Powel is due to speak on Tuesday, May 14, 2024, at 6:00 PM, GMT+4 (Dubai Time). The speech will mostly provide insights regarding steps taken toward the monetary policy. For real-time updates, stay tuned on our telegram channels.
Moreover, on Wednesday, May 15, 2024, the Census Bureau is scheduled to release the Retail Sales m/m data at 4:30 PM, GMT+4 (Dubai Time). The market forecasts a significant drop from 0.7% to 0.4%, indicating a decline in consumer spending, which may potentially cause the U.S. Dollar value to drop.
The key topic under inspection is whether the Fed will initiate its first rate cut this year or keep it steady at 5.50%. By analyzing crucial U.S. economic indicators such as the PPI, CPI, and Retail Sales, witnessing a decline in all three may provide significant insights into the potential timing of a rate cut by the Fed.
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