Policy makers don’t expect to see much new in the Federal Reserve’s statement. They are awaiting comments from Fed Chairman Jerome Powell for advice on the central bank’s decision to phase out its quantitative easing program.
The Fed is expected to announce that it is officially talking about ending the program long before it actually begins. Many Fed watchers believe the forecast will be released in late August, at the central bank’s symposium in Jackson Hole, or later in the fall.
“I think it will be interesting to see how much Powell tries to be accommodating with the risk of the delta variant and the concerns about it,” Jeffery said.
Luke Tilley, chief economist at Wilmington Trust, isn’t expecting much from Powell this week. “I am really targeting Jackson Hole as the most likely candidate for a pivotal point for politics and communication,” he said. “However, next week’s meeting could set the stage for this with statements that point us to some improvement in the economy. They will highlight the new risks of the delta variant, and that’s the risk we think they point out. “
The slowdown in the bond program is important because it is a signal that the Fed is about to reverse its accommodative policies, including eventually its key rate to zero. Tilley said it will likely take a year for the central bank to cut its $ 120 billion monthly bond purchases, and then the door is open for rate hikes.
Investors will also be watching second quarter GDP to see how strong the economy is.
According to the quick update from CNBC / Moody’s Analytics, a survey of economists expects average growth of 9.7% in the second quarter. This is expected to be the peak period of growth, and the average forecast for third quarter growth is 8.3%.
Tilley said he expects growth for the year 2021 of 7% to 7.5%.
Calendar for the upcoming week
Earnings: Tesla, Lockheed Martin, F5 Networks, Check Point Software, Hasbro, LVMH, Otis Worldwide, Ameriprise
10:00 am Sale of new homes
Fed starts 2-day meeting
Earnings: Apple, Alphabet, Microsoft, 3M, Visa, Advanced Micro Devices, General Electric, Boston Scientific, PulteGroup, Raytheon, JetBlue, Archer Daniels Midland, Chubb, Mondelez, Starbucks, Hawaiian Holdings, Waste Management, Corning, Sherwin-Williams, UPS , Stanley Black and Decker, Teradyne, Cheesecake Factory
8:30 am Durable goods
9:00 am FHFA house prices
9:00 a.m. Case-Shiller House Prices
10:00 am Consumer confidence
Earnings: Boeing, Facebook, Pfizer, Ford, Qualcomm, McDonald’s, Bristol-Myers Squibb, PayPal, General Dynamics, GlaxoSmithKline, Norfolk Southern, Automatic Data, CME Group, Garmin, Moody’s, Steve Madden, Penske Auto Group, Hess, Aflac, Canadian Pacific Railway, Fortune Brands, Samsung
8:30 am Advanced economic indicators
2:00 p.m. Fed statement
2:30 p.m. Briefing by Fed Chairman Jerome Powell
Earnings: Amazon, Merck, Comcast, Airbus, Anheuser-Busch InBev, MasterCard, Intercontinental Exchange, AstraZeneca, Hilton Worldwide, Northrop Grumman, Altria, Hershey, Yum Brands, American Tower, Gilead Sciences, Pinterest, Deckers Outdoors, First Solar, Beazer Homes, US Steel, Molson Coors Brewing, Southern Co., Tempur Sealy, Textron, Nielsen, Valero Energy, Martin Marietta Materials
8:30 am Unemployment claims
8:30 am GDP Q2
10:00 a.m. Pending door-to-door sales
Earnings: Caterpillar, Chevron, ExxonMobil, Procter & Gamble, Colgate-Palmolive, AbbVie, Booz Allen, Lazard, Church & Dwight, Johnson Controls, Illinois Tool Works, Cabot Oil & Gas, CBOE Global Markets
8:30 am Personal consumption expenses
8:30 am Labor cost index T2
9:00 a.m. St. Louis Fed Chairman James Bullard
9:45 am Chicago PMI
10:00 am Consumer sentiment
8:30 p.m., Fed Governor Lael Brainard