The US earnings season rolls on next week but it will nevertheless be all about the Fed, which delivers its monetary policy statement on Wednesday night.
The current odds remain at 100% for a rate cut, but a cut of only -25 points has crept up to around 80% with around 20% still hanging on for -50.
On that basis we can safely say no cut would see Wall Street sell-off in a very significant way, and a -50 point cut would prompt another race through to ever higher all-time highs. The question is what response will meet a -25 point cut. None, given this is the most expected outcome? Sell-off, on either disappointment it’s not -50 or just sell-the-fact? Or more new all-time highs, on a sense of relief the Fed has delivered on its hints?
Ahead of the meeting, the Fed will need to ponder the first estimate of US June quarter GDP tonight, consumer confidence and PCE inflation on Tuesday, and the ADP sector jobs report on Wednesday, if FOMC minds have not yet been firmly made up.
The June manufacturing PMI and jobs numbers follow on Thursday and Friday, but by then it will be too late.
If it makes any difference, the Fed might also wish to contemplate the fact the ECB didn’t cut its rate last night, and take note of the eurozone’s equivalent GDP result due on Wednesday.
In a busy week downunder, economic data next week include monthly numbers for building approvals, private sector credit, house prices and retail sales. And also numbers for June quarter CPI and PPI, as well as import/export prices.
Manufacturing PMIs from across the globe are due on Thursday, other than in China, which posts both manufacturing and services PMIs on Wednesday.
On the stock market, Wednesday, being the last day of the month, sees a last minute rush of resource sector production reports, in a week which also brings the initial trickle of earnings results.
Following GUD Holdings ((GUD)) and ResMed ((RMD)) today, we’ll see reports from Alacer Gold ((AQG)), Credit Corp ((CCP)), CYBG ((CYB)), Genworth Mortgage Insurance ((GMA)), UR-Westfield ((URW)) and Rio Tinto ((RIO)).