Week Ahead: Flash PMIs, Fed Minutes To Dictate Sentiment; RBNZ To Hike Again
XM Group | May 20, 2022 09:38AM ET
US economy under the spotlight amid recession risks
There’s been a lot of talk about a recession in Europe but less so for the United States. But reality might be catching up with the markets, which until now, were confident that the American economy is robust enough to evade a sharp downturn. This sudden switch to a bleaker outlook has knocked down the US dollar and pushed Wall Street back into the red.
With quite a lot to choose from on the US calendar next week, senses will be heightened as investors will be on the lookout for recession warnings. Kicking things off on Tuesday, the flash PMIs by S&P Global will be watched for signs that any part of the US economy began to struggle in May under the weight of soaring prices, higher borrowing costs and growing global uncertainties. New home sales for April are also out on Tuesday, and durable goods orders will follow on Wednesday. On Thursday, the second estimate of first quarter GDP growth is due alongside pending home sales.
But stealing the limelight will be Friday’s releases, which include personal income and consumption, as well as PCE inflation. Both incomes and spending are expected to have grown at healthy clips in April. So attention will mainly fall on the core PCE price index as speculation builds that inflation in the US is at a turning point.
The Australian dollar is struggling to convincingly reclaim the $0.70 handle following a six-week-long slide against the greenback. An upbeat set of figures could provide it with the leg up that it needs. However, at the start of the week, the aussie could be jolted by political risks. Australians go to the polls on May 21 to vote for a new government. If incumbent Prime Minister Scott Morrison’s Liberal-National coalition loses to the opposition Labor Party, the local dollar could slip against its main rivals.
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