Investors have a lot to keep an eye on this week, as economic data releases and appearances by Federal Reserve officials are likely to move markets. Here are the top five things to watch:
U.S. Debt Ceiling Update
Investors are eagerly awaiting updates on plans to raise the U.S. debt ceiling this week. Congress is currently in a stalemate over the borrowing limit, and there are concerns over a potential default as early as June 1st. Talks between President Biden and top lawmakers on raising the $31.4 trillion debt ceiling are set to resume early this week. Any progress in negotiations could provide relief for markets, which have been weighed down by the uncertainty.
Federal Reserve Speakers and Data
In addition to the debt ceiling, investors will be paying close attention to remarks by Federal Reserve officials. With worries that the Fed’s aggressive rate hikes could tip the economy into a recession, appearances by several central bank officials in the coming days will be closely watched. Fed Vice Chair for Supervision Michael Barr is set to testify before Congress on recent banking sector stresses and the central bank’s response. On Friday, Fed Chair Jerome Powell and former Fed head Ben Bernanke will participate in a panel discussion on monetary policy in Washington. Other Fed officials scheduled to make appearances during the week include New York Fed President John Williams, Cleveland Fed Governor Loretta Mester, Minneapolis Fed President Neel Kashkari, and governors Philip Jefferson and Michelle Bowman.
U.S. Economic Data
Investors will be looking for insights into the strength of the global economic outlook from data releases out of the Eurozone, UK and China. In the U.S., April data on retail sales and industrial production are due out on Tuesday, with retail sales expected to rebound. The weekly report on initial jobless claims is also due out on Thursday.
The Eurozone is set to release revised data on first quarter GDP on Tuesday, with economists expecting the bloc’s economy to have expanded by just 0.1% in the three months to March. Some economists say stagnation has continued and could result in a recession later this year. The more forward-looking ZEW Institute surveys of business conditions and sentiment in the region’s largest economy, Germany, are also set to be released the same day. Meanwhile, in the UK, the wage component data of Tuesday’s jobs report will be closely watched as inflation remains in double digits. The Bank of England has indicated that the decision on whether to hike rates again at its June meeting will hinge on the wage and inflation data out before then.
China is set to release a flurry of economic data on Tuesday, including reports on retail sales, industrial production, and fixed asset investment. Economists are expecting retail sales and industrial production to have accelerated at a rapid annual rate, while fixed asset investment is also expected to pick up significantly. However, the monthly comparison may offer a more accurate comparison as China’s economy was still under strict COVID lockdowns during the same period last year. Economic data out of China last week indicated that the world’s second-largest economy is struggling to gain momentum amid an uneven recovery after pandemic restrictions were lifted, adding to doubts over how much it can contribute to growth in the global economy this year.
As investors look ahead to a busy week, it’s important to keep in mind that unexpected developments can always arise. Nevertheless, staying informed about these top five things to watch can help investors stay ahead of the curve and make informed decisions.