World Week Ahead: Eyes on Fed’s Powell, FOMC minutes

US Treasuries rose on Friday, sending the yield on the 10-year note to 3.06 percent. Photo: Getty Images

A speech by Federal Reserve Chair Jerome Powell as well as the minutes from the latest US central bank meeting will form a key focus for investors trying to gauge how many more interest rate hikes might follow the one they’re expecting next month.

US trade talks with China will also be closely watched amid signs of progress.

“We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework,” US Treasury Secretary Steven Mnuchin told Fox News Sunday.

The Fed’s Powell is scheduled to speak in Stockholm on Friday, while minutes from this month’s Federal Open Market Committee meeting will be released first, on Wednesday.

"The May FOMC minutes should show broad support for a small overshoot of the Fed's inflation target, consistent with adding 'symmetric' to the statement," TD Securities said in a note on Friday.

"This slightly dovish message may be paired with more optimism on the inflation outlook but more concern about slowing global growth and protectionism,” according to TD Securities. "Markets may be exposed to dovish views after pricing in more hikes recently."

Other Fed officials set to speak this week include Raphael Bostic, Patrick Harker and Neel Kashkari today, William Dudley on Thursday, as well as Charles Evans and Robert Kaplan on Friday.

Fresh data on the US economy will arrive in the form of reports on the Chicago Fed activity index, due today; Richmond Fed manufacturing index, due Tuesday; PMI composite, and new home sales, due Wednesday; weekly jobless claims, FHFA house price index, existing home sales, and Kansas City manufacturing index, due Thursday; and durable goods orders, and consumer sentiment, due Friday.

Wall Street ended steady to weaker on Friday. The Dow Jones Industrial Average finished the day little changed from the previous close, while the Standard & Poor’s 500 Index fell 0.3 percent, while the Nasdaq Composite Index declined 0.4 percent.

An 8.3 percent slide in shares of Applied Materials on Friday — after it posted results that failed to meet expectations and downgraded its outlook — weighed on Wall Street.

"Smartphone sales have been below expectations, particularly for high-end models. And in response, both semiconductor and display suppliers have made adjustments to their capacity planning," CEO Gary Dickerson told investors on Thursday's earnings call, CNBC reported.

US Treasuries rose on Friday, sending the yield on the 10-year note to 3.06 percent.

Wall Street’s three benchmark indexes posted declines for the week.

“The difficulty of investing is on the rise, that is largely a factor of inflationary pressures becoming more prevalent and interest rates on the cusp of a regime change,” Terry Sandven, senior equity strategist at US Bank Wealth Management in Minneapolis, told Reuters.

While oil prices slipped on Friday, they still posted gains for the sixth consecutive week and may continue their ascent in the short term, according to Reuters.

"So far, investors have shrugged off any threat that a higher oil price may pose to economic growth," John Higgins, chief markets economist, at Capital Economics said in a note on Friday. "We think that investors are right to be relaxed about the rising price of oil.

"Today, there is less chance that a higher price of oil will lead to much higher inflation, and so less need for the Fed to act very aggressively," according to Higgins. "Looking ahead, though, we suspect that oil and equities will both falter, as demand in the global economy cools and supply in the oil market grows again."

In Europe, the Stoxx 600 Index fell on Friday, down 0.3 percent, though closed 0.7 percent higher for the week.