Political instability fueled the greenback’s demise last week as concerns regarding the Trump administration’s possible collusion with Russian officials during last year’s Presidential election continued to perpetuate. The downside pressure on USD rates was partly offset by the relatively hawkish FOMC’s April minutes. Market expectations of another 0.25% rate hike in two weeks or at the September meeting is high. A December rate hike along with a reduction in the Fed’s balance sheet holdings of US Treasuries are also expected.
Ten-year treasury rates are opening flat at 2.25% as of this writing. Crude oil opening down 1.08% at $49.46/bbl after OPEC disappointed the market with not cutting back oil supply as much as expected at its meeting last Thursday. Equity futures are opening slightly lower this morning, after a seven-day winning streak, with the S&P 500 down 0.18% and Nasdaq down 0.13%.
Overseas, the Sterling was hit on the back of the terrorist attack in Manchester, followed by polling data that suggested that Britain’s Labour Party had cut Theresa May’s Conservative Party lead to five points as the elections quickly approach on June 8. Italian bond yields were lower on the back of a proposal to push up the elections.
Here’s what in store for this week:
- April Personal Income & Spending figures (Tuesday)
- May Chicago PMI and April Pending Home Sales (Wednesday)
- May ADP and May ISM Manufacturing (Thursday)
- April Trade Balance (Friday)
- May employment report (Friday)
- Federal Reserve officials including Lael Brainard (leaning dove), Robert Kaplan (neutral) and Patrick Harker (neutral) will speak this week.
