Fed meeting
Investors will be zeroing in on the Fed’s statement at the conclusion of its two-day policy meeting on Wednesday against a background of persistent concerns over whether inflation spikes could pressure the central bank to start tapering its stimulus sooner than expected.
The Fed has repeatedly said that near-term price spikes will not translate into lasting inflation and Chairman Jerome Powell is expected to stick to this stance and reassure markets the Fed’s policy will remain accommodative.
While inflation numbers are rising, the recovery in the labor market remain sluggish. The economy added 559,000 jobs last month after gains of just 278,000 in April. That left employment about 7.6 million jobs below its peak in February 2020.
Most analysts are not expecting the Fed to begin discussing scaling back its asset purchase program before its annual conference in Jackson Hole, Wyoming, in late August.
Economic data
Away from Fed meeting, the U.S. is to release May data on retail sales and producer price inflation on Tuesday.
Also out on Tuesday is industrial production data which will be closely watched amid issues over supply constraints and labor market shortages. This could translate into increases in producer price inflation.
The economic calendar also features reports on housing starts and initial jobless claims. Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly 15 months as the reopening continues.
Meme Stocks Mania
Meme stocks could also remain in the headlines after a volatile ride last week. GameStop ($GME) hit a high of $344.66 Tuesday and dropped as low as $206.13 Friday before closing at $233.34 per share.
Besides meme stocks, Treasuries could also be in focus after an unexpected slide in yields. There was a major move in the rate of the benchmark 10-year, watched most closely by investors, as it influences mortgages and other important lending rates.
