As we are nearing the end of the Q2 earnings season, the market will focus mostly on a number of housing market statistics and react based on the Fed’s decision to hike rates in the remaining months of the year. However, expect the news cycle to be dominated by Trump’s scheduled meeting with North Korean leader Kim Jong-un.
There was a speculation among investors that the Fed might end the rate hikes after June based on a CNBC report. Given that the Fed has previously expressed an accommodating approach to higher than 2% inflation in the economy, the speculation of a preliminary end to the reduction in the bond portfolio size was a valid one.
However, there is a severe shortage of labor in the country as the labor participation rate remained historically low despite the increase in wage levels over the last few months. So, unless consumer prices remain stable in June, the Fed might not be able to keep its promise of turning a blind eye to mounting inflation in the economy.
To sum up, expect economic data to move the market this week. However, unless there is some positive development in Singapore that offers a stable geopolitical outlook, there is hardly any potential for bullish momentum in the market.
Check out last week’s Market Glance here in which investors focused on the possibility of another rate hike from the Fed in June as the unemployment rate dropped once again.
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