Tuesday, May 28, 2013
The market takes timeout on worrying about the Fed in today’s trading session and take inspiration from positive overnight momentum out of Asia and Europe. No specific developments out of those regions, but markets reversed the prior week’s losses on hopes of continued central bank support.
On the economic docket, we have the Conference Board’s Consumer Confidence survey for May and the March Case-Shiller home price index coming out a little later. Both measures are expected to show gains from the prior-month’s levels, with consumer confidence expected to reach a 6-month high in today’s reading.
We don’t have much on the economic calendar this week, with the second read on Q1 GDP coming out on Thursday and the April Personal Income & Outlays report coming out on Friday as the key economic reports. The GDP report is expected to show no revision from the +2.5% growth pace originally reported while consumer spending in April is expected to be unchanged. The consensus view of the economy is that GDP growth in Q2 temporarily downshifted from the first quarter’s pace, but goes back up from the third quarter onwards.
The likely positive momentum in today’s session doesn’t mean that questions about the direction of Fed policy have gone away altogether. The issue will come back to the spotlight with next week’s jobs report and other key economic data. It is reasonable to expect the market starting to price in a change in Fed policy at the June meeting if we get a positive jobs report next week.
Director of Research