After financial markets have finally started to show signs of solid footing in July following a record decline during the first half of the year, this week’s busy economic and earnings calendar takes on added significance for investors.
A 75-basis-point hike at this week’s Federal Reserve (Fed) meeting is nearly set in stone after numerous Fed officials walked back the rumor of a 100-basis-point hike. Fed Chair Jerome Powell’s post-meeting press conference Wednesday is likely to provide some guidance on the size of future rate hikes and any changes to the size of quantitative tightening (i.e., balance sheet reduction). With numerous points on the yield curve already in inversion, the Fed is likely to discuss shifting its focus to the balance sheet, with smaller rate hikes to prevent a deeper inversion of the curve.
Thursday’s second-quarter Gross Domestic Product (GDP) release highlights a busy week of new economic data. Another negative GDP print would indicate the United States economy is in a technical recession despite the Biden administration’s new guidance on what defines a recession. New data coming out Thursday and Friday for the Fed’s favorite inflation gauge — Personal Consumption Expenditures (PCE) — will also be closely watched for some sign that inflation may be cresting.
A very busy week of second-quarter earnings announcements will be highlighted by numerous large-cap technology names, including Microsoft, Alphabet, Apple and Amazon.
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