What a week ahead.
I’d expect speculation about what the Federal Reserve will say on Wednesday to dominate a very lengthy slate of market news.
No real suspense about whether or not the Fed will raise rates at its July 27 meeting. The central bank has made it clear that it will continue to fight inflation by increasing interest rates at the next several meetings.
The question is By how much? 50 basis points? 75 basis points? 100? On Friday the CME FedWatch Tool, which uses prices in the Fed Funds Futures market to calculate the odds of a move in the Fed’s benchmark interest rate, was giving 80.5% odds of a 75-basis-point increase and 19.5% odds of a 100-basis-point increase. Do the math– nobody in the market expects just 50 basis points right now.
The meeting won’t include an update on expectations for interest rates, inflation, or economic growth–the closely watched Dot Plot isn’t due to be updated until the Fed’s September 21 meeting. But the Fed will still say something about its take on inflation–“stubbornly high”?–the job market–“continued strength”?–and economic growth–“recession fears are overstated but not unjustified”?–that could move the markets.
Competition for market mind share this week?
After Friday’s Russian missile attack on the Ukrainian Black Sea port of Odesa, commodity markets will be struggling to price in grain export deal/no grain export deal. I’d expect to see a Monday reversal of some, at least, of Friday’s drop in commodities prices.
And technology earnings. Will they be strong enough to revive the tech rally that ruled most of last week? Or will they contain bad news to follow on the weak results on Thursday from Twitter (TWTR) and Snap (SNAP)? Of particular interest will be reports from Alphabet (GOOG) and Microsoft (MSFT) on Tuesday, July 26, and from Amazon (AMZN) on July 28 for any light they might shed on a slowdown in online advertising of the dimensions reported by Snap. We also get an important report from Apple (AAPL) on July 28. Speculation has run wild recently on a possible slowdown in iPhone sales for the remainder of calendar 2022.
Enough to keep us all busy this week, I think.
