By Noreen Burke
Investing.com – Federal Reserve Chairman Jerome Powell will appear before Congress on Tuesday to discuss the economic stimulus measures implemented so far. A day later, the minutes of the April Fed meeting will be released. Investors will watch for weekly data on jobless claims as the reopening of the economy accelerates. The retailers’ results will shed some light on consumer spending in the midst of the coronavirus pandemic, while on Tuesday we will learn the data on the upcoming crude oil futures futures contract. Meanwhile, all indications are that the central banks of South Africa and Turkey will cut interest rates again. This is what you need to know to start your week.
1. Powell’s appearance, FOMC minutes
The Fed president will appear before the Senate Banking Committee on Tuesday, along with Treasury Secretary Steven Mnuchin, to inform government officials of developments in the economic stimulus programs approved so far.
In a speech last week, Powell offered a sober assessment of the long-term risks to America’s economic forecasts and the possible need for elected officials to approve more spending programs to keep the economy afloat.
On Wednesday, the Fed will publish those of its April meeting. In its rate announcement last month, the Fed said it will keep interest rates close to zero until officials are “confident that the economy has managed recent events.”
2. Economic data
In the United States, the most relevant report continues to be the weekly report of initial applications for unemployment benefits. With the reopening of the economy gaining momentum, economists expect a reading below 2.5 million euros, indicating that the layoff rate is slowing down a bit.
The UK economic agenda is complete this week, with employment, retail sales and inflation data for March. Given that confinement did not start in the UK until the end of March, it may be too early to see the impact of the pandemic on employment numbers.
April data could show at least a 15% decrease in spending, while oil prices are expected to have caused the collapse of last month.
3. Results of the retailers
Although the United States’ first quarter earnings reporting season is almost over, the retail sector is beginning to report. This week we will learn about the results of the largest retailers in the United States, including Walmart (NYSE :), Home Depot (NYSE :), Lowe’s (NYSE :), Target (NYSE :), Kohl’s (NYSE 🙂 and Best Buy (NYSE :). Their figures will show whether American consumers continue to spend money despite widespread confinements of the coronavirus.
Retailers present results in the shadow of online shopping giant Amazon (NASDAQ :), which is among the “enjoy at home” services that benefit from confinement. Their shares have risen 28% so far this year. .
4. Will the oil crash repeat?
West Texas Intermediate’s monthly oil futures contract expires Tuesday and many energy traders are concerned about a repeat of last month’s drop in oil prices, when prices fell into negative territory for the first time in history. .
The expiration of the contract, normally uneventful, became dramatic in April, as overflowing storage tanks deterred traders from accepting more shipments of oil.
The United States Commodity Futures Trading Commission has warned market participants to be prepared for high volatility and again negative prices, with oil storage still tight and demand forecasts still severely weighed down. .
But oil prices have recently rebounded in the hope that the relaxation of the containment measures will boost energy demand forecasts. In another hopeful sign, US crude stocks are declining this past week for the first time since January.
However, some traders seem to heed this CFTC warning. Volumes for the July futures contract, which expires in one month, exceed the June contract by almost 50%.
5. Rate cuts in emerging markets
The central banks of Turkey and South Africa hold their monetary policy meetings on Thursday and everything points to the fact that both will cut rates again despite the heavy losses that their currencies have suffered recently.
Analyst surveys predict that South Africa will cut its benchmark interest rates by 4.25% by another 50 basis points. Economists stress that any easing of monetary policy should be considerable if it is to support the battered economy.
The Turkey bank meeting will be even more interesting. The has plummeted to all-time lows, currency reserves are declining and inflation has been in the double digits, although all of this will probably not deter the central bank from cutting another 50-100 basis points from its current figure of 8, 75%.