In this shortened Fourth of July week, tariff-related issues are a major focus as U.S. tariffs against Chinese goods are due to be implemented on July 6, Prudential’s Chief Market Strategist Quincy Krosby said Monday in her weekly “Connecting the Dots” outlook.
China has made it clear that should the tariffs be imposed, they will retaliate. Similarly, on Sunday, the Canadian government announced 13 billion dollars in tariffs on U.S. goods in reaction to aluminum tariffs placed by the U.S.
“Escalating trade tensions between the U.S. and the EU, Canada and Mexico, and of course with China, have markets defensive as the new quarter begins. Global investors are paying close attention to headlines to see if there’s any move towards negotiations,” Krosby said.
The calendar this week is filled with key data for market participants, highlighted by the employment report released on Friday. With overall inflation firming, wage data will be analyzed carefully to ascertain if wage growth is also adding to inflationary pressures.
“This is a data-filled week,” Krosby said. “Besides the minutes from the Fed’s last meeting, everyone is focused on wages. With inflation firming broadly, an uptick in wage growth will signal that inflationary pressures are building.”
Minutes from the last Federal Open Market Committee (FOMC) meeting will be released on Thursday. Analysts and traders alike will comb through the report to glean more about the Fed’s rate hike plans, as well as the Fed’s balance sheet projections.
“Although the last FOMC meeting included a press conference, market participants want to see if there’s additional information that can shed light on the Fed’s plans for rates this year, as well as the unwinding of its balance sheet. Most likely there’s nothing new for the market, but analysts will be combing through the minutes nonetheless,” Krosby said.
This week’s important economic data:
Monday: ISM manufacturing index; construction spending
Tuesday: Vehicle sales; factory orders
Thursday: ADP private sector employment report; ISM non-manufacturing index; FOMC minutes
Friday: Employment report
Read Quincy Krosby’s full Q3 Market Commentary: The Road to Normal.
The views and opinions are those of the author at the time of publication and are subject to change at any time due to market or economic conditions. This is solely for informational purposes. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.