It looks like this week could be a quiet one, at least as far as new developments from economic data are concerned. Few of this week’s releases have the potential to put a damper on the recent upswing in financial markets, and the biggest release, Retail Sales, is expected to show confirm with hard data the optimistic consumer sentiment reports from May.
The week begins and ends on a light note, but Wednesday and Thursday could be important as the Treasury releases the Trade Balance, the Fed publishes its latest Beige Book, and a Jobless Claims index could confirm a slowdown in job destruction.
Key Releases This Week:
Monday: No data.
Tuesday:
Aside from the usual weekly retail sales reports from ICSC-Goldman Sachs and Johnson Redbook, the only data point to hit markets is the 10 am release of Wholesale Trade, which is hardly a market shaker.
Wednesday:
Wednesday always begins with the weekly Loan Applications release from the Mortgage Bankers Association at 7am. Those in real estate will want to gauge how demand holds up as 30-year mortgage rates climb.
An hour later, Charles Evans, president of the Chicago Fed, gives remarks on the ongoing recession in Chicago.
At 8:30, the U.S. Trade Balance is expected to report a monthly trade deficit of $28.5 billion in April, higher than the -$27.6 billion deficit in March. The deepening deficit is due to rising prices for crude oil. Forecasts range from -$26.1 billion to -$31.0 billion.
At 2 pm, the Beige Book will give an anecdotal assessment on economic conditions for the past six weeks from each of the 12 Federal Reserve districts. The book is of more interest to analysts than markets, though MND readers may find value in its regional look at real estate conditions.
Released at the same is the Treasury’s budget statement for May. Economists look for a monthly fiscal deficit of $180 billion, compared with a $20 million deficit in May 2008.
Thursday:
The biggest release of the week is the Retail Sales report for May. Consumption accounts for two-thirds of U.S. GDP, so any optimism on that front will help markets maintain gains from the past three months. Analysts are looking for a 0.6% increase in May, a much better reading than the -0.4% print in April. When autos are excluding, sales are expected to rise 0.3%.
“Consumers are beginning to spend the extra income resulting from the federal stimulus package and income tax refunds,” wrote the forecasting team from IHS Global Insight. “But overall spending remains lackluster, as rising unemployment leads to cautious discretionary spending.”
Last week’s Jobless Claims report saw the first drop in continuing claims since January, so markets will want to see if that was merely a blip or the start of a new trend. Initial claims for the first week of June are expected to come in at 625k, following a dip to 621k claims in the prior week.
Friday:
After rising rapidly in May, Consumer Sentiment is expected to continue a modest upward trend in the preliminary survey for June. Analysts expect the Reuters/University of Michigan survey to come in at 70.0, up from 68.7 in May. Stock prices should boost sentiment, but oil hitting $70 per barrel could weigh on optimism, as could the falling value of the dollar.