The Week Ahead – Anticlimactic

Welcome to “The Week Ahead” where we take a moment to provide our thoughts on what we can expect in markets and the economy during the upcoming week.

Congratulations to the Golden State Warriors for winning the NBA Championship! Sports pundits across the world for the most part all had agreed that the Warriors were heavy favorites to win their third championship in four years. The only real question was would it be a four game sweep or possibly go five or six games. After an exciting game one, the rest of the series was merely a formality of the inevitable. Sorry, Cleveland Cavaliers fans!

Global investors will be focused on this week’s FOMC meeting. With the current market pricing in a 93% chance of the second rate hike of 2018 occurring this week, the real question now is if the Fed hikes three or four times this year. Why the potential of a fourth rate hike this year? A few reasons, such as solid economic data in terms of an exceptional labor market, steady economic growth, and positive inflation (albeit a slow grind). Extremely resilient financial markets are also playing into the equation, as the market has been able to shrug off February’s domestic equity swoon, slowing European growth, ItalEXIT fears, trade wars, and volatility in emerging markets. All eyes will be on the dot plot to see if there is any change there, but the more likely avenue will be more hawkish “Fedspeak” at the press conference by Fed Chair Powell and subsequent speaking engagements by Fed governors. If you recall, the Fed has telegraphed out the runway for interest rates pretty clearly since the Great Financial Recession and the last thing they would want would be a surprise. Anticlimactic.

Data deck for June 9 – June 15: