U.S. rate futures have priced in a 79.7% chance of a 25 basis point rate cut and a 20.3% chance of no rate change at the September FOMC meeting.
Second-quarter corporate earnings season continues, and investors await new reports from notable companies this week, including Advanced Micro Devices (AMD), Palantir (PLTR), McDonald’s (MCD), Walt Disney (DIS), Uber Technologies (UBER), Caterpillar (CAT), Amgen (AMGN), Eli Lilly (LLY), Pfizer (PFE), Gilead (GILD), and Shopify (SHOP). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +4.5% increase in quarterly earnings for Q2 compared to the previous year, exceeding the pre-season estimate of +2.8%.
The U.S. economic calendar lightens up considerably following last week’s flurry of economic data releases. Investors will closely monitor the key ISM survey on U.S. services sector activity to assess the likelihood of interest rate cuts in the coming weeks. This data comes on the heels of the weaker-than-expected ISM manufacturing PMI, which, along with the soft jobs report, “amplifies concerns about economic slowdown,” according to FP Markets analyst Aaron Hill. Weakness in the services ISM could strengthen the case for a rate cut in September. Other noteworthy data releases include U.S. Trade Balance, the S&P Global Composite PMI, the S&P Global Services PMI, Initial Jobless Claims, Nonfarm Productivity (preliminary), Unit Labor Costs (preliminary), and Consumer Credit.
Market participants will also parse comments from several Fed officials following the disappointing jobs report and the central bank’s decision to leave rates unchanged. San Francisco Fed President Mary Daly, Boston Fed President Susan Collins, Fed Governor Lisa Cook, Atlanta Fed President Raphael Bostic, and St. Louis Fed President Alberto Musalem are scheduled to speak this week.
Meanwhile, investors will look for any signals from the White House on a potential nominee to replace Adriana Kugler, after the Fed board member announced her resignation on Friday. President Trump told reporters on…
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