Week Ahead: The Fed’s outlook for the rest of 2020

George Walker, Friday, 24 July 2020

MKT-6878_WA-Fed_blog

After another relatively quiet week on the macro front, this week now sees an important Fed interest rate decision in the US that will be of huge interest to traders. How quickly will the Fed expect the world’s largest economy to recover and are there signs that it could return to normal this year? We also have a number of high-profile companies releasing their corporate earnings throughout the week,  where we could see some very interesting results. Here’s everything you need to know for trading the Week Ahead.

US goods, crude oil and the Fed

We kick off on Monday afternoon with Durable Goods Orders out of the US. Durable goods are products designed to last more than three years and are often quite expensive, so these numbers are a good indication of people’s disposable income in the United States.

On Tuesday we get the first of two weekly US crude oil inventory data at 21:30 which saw a larger-than-expected build in oil inventories last time out. This offset the surprise drawdown seen in the previous week, as a result, the price of oil and storage levels are once again coming back in focus for oil traders. Oil prices remain subdued compared to the highs we saw at the start of the year when it was trading circa $70pb, but have rebounded strongly from the historical negative prices we saw in April.

The high-impact macro events really start to increase as the week progresses. The highlight of the week will likely be the interest rate decision and monetary policy statement from the Federal Reserve on Wednesday evening. Along with corporate earnings, expectations that the Federal Reserve stands ready to support the economy has been a major contributor to gains seen in equity markets, notably US indices. The press conference which follows the rate announcement will have the attention of traders and investors around the world as they hunt for clues from the Fed regarding forward guidance and at what pace they expect the economy to recover. Questions from the press often lead to unscripted answers so we could expect to see volatility around this time.

German GDP, Asian employment and PMI data and US jobless claims

German Gross Domestic Product and Unemployment data gets Thursdays trading underway. The German economy is considered the engine of the eurozone so investors will want to see strong figures released as the European economic recovery gets underway.

We will get a good gauge of the health of the US economy in the afternoon with the release of Gross Domestic Product data and initial and continuing jobless claims. Since the pandemic took hold, these figures have been increasingly important so traders of US indices and the USD will need to take note when they are released.

Employment data from Japan gets the final trading day of the week underway followed shortly after by Manufacturing and Services PMI data from China. In order to end the week on a positive note, investors will want to see strong data from China to cement a recovery in the world’s second largest economy.

Preliminary Eurozone Consumer Price index inflation data as well as Gross Domestic product from both Europe and Canada round off the week.


Corporate earnings

Earnings season so far has seen most of the companies report better than expected results and has been a major contributor to gains seen in equity markets. There is no let-up in earnings releases as we move into what could potentially be the most influential week of earnings with a plethora of corporate giants set to announce results.

Among those due to update the markets from the US this week will be Visa, Pfizer, McDonald’s, eBay, PayPal, Sanofi, Boeing, Mastercard, Exxon Mobil, Caterpillar and many more.

Favourites amongst investors recently have been the FAANG stocks namely Facebook, Apple, Amazon, Netflix and Alphabet's Google. Netflix have already announced earnings which moderately missed expectations and saw their share price decline from record highs having rallied more than 90% from March 2020 lows.

Over the course of this week we see the remaining FAANGs report. Collectively, share price fluctuations in these equities can have a huge impact on indices such as Wall Street, US Tech 100, SP 500 and investor confidence in general which can spill over into global equity markets.

The UK also has a big week ahead on the results front as we get more major companies updating the markets.

Royal Dutch Shell, one of the largest companies listed on the UK 100, reports earnings on Thursday before markets open. The price of oil has been extremely turbulent in 2020 with prices even going negative. Has the oil giant coped well with such fluctuations in the value of oil?

Three of the big UK banks will be reporting over the coming week. These numbers could be critical to see how they have fared during the nationwide lockdown. During this time, the UK government provided a ‘mortgage holiday’ meaning homeowners did not have to repay mortgages for a period. Previous comments from the banks also indicated that they have had to put vast sums of capital aside in expectations that credit would not be able to be repaid.

Due to the coronavirus, the pharmaceutical sector has been generating a lot of interest as they race to develop a reliable vaccine. AstraZeneca traded at record highs last week before pulling back. Results are delivered on Thursday and are likely to draw a lot of attention from investors. They are currently developing an experimental vaccine with Oxford University and have produced an immune response in early clinical trials. Hopes are that the vaccine could be in use by the end of the year. Will the company elaborate on this when we hear their results?

As a reminder, we can see large gaps up or down so traders/holders of these equities will need to take note of the dates of the results as orders can be filled at different levels than desired.

All times indicated are BST.


ECONOMIC CALENDAR (all times are BST)

Monday, 27 July

05:30 JPY All Industry Activity Index
07:00 JPY Coincident Index
06:00 JPY Leading Economic Index
09:00 GER IFO – Business Climate
09:00 GER IFO – Expectations
09:00 GER IFO – Current Assessment
13:30 USD Durable Goods Orders
13:30 USD Durable Goods Orders ex Defence
13:30 USD Durable Goods Orders ex Transport
13:30 USD Nondefense Capital Goods Orders ex Aircraft
15:30 USD Dallas Fed Manufacturing Business Index
23:45 NZD Total Filled Jobs

UK Company Announcements:

N/A

US Company Announcements:

SAP SE

NXP Semiconductors N.V.

Tuesday, 28 July

11:00 GBP CBI Distributive Trades Survey – Realised
13:55 USD Redbook Index
14:00 USD S&P/Case-Shiller Home Price Indices
15:00 USD Richmond Fed Manufacturing Index
15:00 USD Consumer Confidence
21:30 USD API Weekly Crude Oil Stock

UK Company Announcements:

Greggs

St James Place

US Company Announcements:

Visa Inc
Pfizer Inc
Amgen Inc
McDonald’s Corporation
Raytheon Technologies Corporation
3M Company
Starbucks Corporation
S&P Global Inc
Altria Group
Mondelez International Inc
Advanced Micro Devices Inc
Chubb Limited
Sherwin-Williams Company
Roper Technologies Inc
Banco Santander
eBay Inc

Wednesday, 29 July

02:30 AUD Consumer Price Index
02:30 AUD RBA Trimmed CPI
08:00 EUR ECB Non-Monetary Policy ECB Meeting
09:00 CHF ZEW Survey – Expectations
15:00 USD Pending Home Sales
15:30 USD EIA Crude Oil Stocks Change
19:00 USD Fed Interest Rate Decision
19:00 USD Fed’s Monetary Policy Statement
19:30 USD FOMC Press Conference
23:45 NZD Building Permits s.a.

UK Company Announcements:

Aston Martin Lagonda
Drax
Rathbone
Rio Tinto
Smurfit Kappa
Taylor Wimpy
Wizz Air
Aveva Group
Next
Smith & Nephew

US Company Announcements:

Facebook Inc
PayPal Holdings Inc
Sanofi
Shopify Inc
QUALCOMM Inc
Boeing Company
Service Now Inc
Crown Castle International Corporation
Anthem Inc
Equinix Inc
Automatic Data Processing Inc
Enbridge Inc
General Electric Company
CME Group Inc
Moody’s Corporation
General Motors Company

Thursday, 30 July

00:50 JPY Retail Trade
00:50 JPY Large Retailers’ Sales
02:00 NZD ANZ Business Confidence
02:00 NZD ANZ Activity Outlook
02:30 AUD Import Price Index
02:30 AUD Export Price Index
02:30 AUD Building Permits
07:00 GBP Nationwide Housing Prices
07:00 GER Gross Domestic Product
08:00 CHF KOF Leading Indicator
08:55 GER Unemployment Rate
08:55 GER Unemployment Change
09:00 EUR Economic Bulletin
10:00 EUR Services Sentiment
10:00 EUR Consumer Confidence
10:00 EUR Industrial Confidence
10:00 EUR Business Climate
10:00 EUR Economic Sentiment Indicator
10:00 EUR Unemployment Rate
13:00 GER Consumer Price Index Preliminary
13:00 GER Harmonised Index of Consumer Prices Preliminary
13:30 USD Personal Consumption Expenditures Prices Preliminary
13:30 USD Core Personal Consumption Expenditures Preliminary
13:30 USD Gross Domestic Product Preliminary
13:30 USD Initial Jobless Claims
13:30 USD Continuing Jobless Claims
15:30 USD EIA Natural Gas Storage Change
23:00 NZD ANZ – Roy Morgan Consumer Confidence

UK Company Announcements:

AstraZeneca
BAE Systems
Barclays
Inchcape
Lloyds Banking Group
Rentokil Initial
Schroders
Segro
Royal Dutch Shell

US Company Announcements:

Apple Inc
Amazon.com Inc
Alphabet Inc
Proctor & Gamble Company
Mastercard Inc
Comcast Corporation
American Tower Corporation
Anheuser-Busch Inbev SA
United Parcel Service
Gilead Sciences Inc
Stryker Corporation
Cigna Corporation

Friday, 31 July

00:30 JPY Unemployment Rate
00:30 JPY Jobs/Applicants Ratio
00:50 JPY Industrial Production
02:00 CNY Non-Manufacturing PMI
02:00 CNY NBS Manufacturing PMI
07:00 GER Retail Sales
07:00 GER Import Price Index
07:30 CHF Real Retail Sales
10:00 EUR Consumer Price Index Preliminary
10:00 EUR Consumer Price Index – Core Preliminary
10:00 EUR Gross Domestic Product Preliminary
13:30 USD Personal Consumption Expenditures – Price Index
13:30 USD Core Personal Consumption Expenditure – Price Index
13:30 USD Personal Income
13:30 USD Personal Spending
13:30 USD Employment Cost Index
13:30 CAD Industrial Production Price
13:30 CAD Gross Domestic Product
14:45 USD Chicago Purchasing Managers Index
15:00 USD Michigan Consumer Sentiment Index
18:00 USD Baker Hughes US Oil Rig Count

UK Company Announcements:

Intertek Group
Rightmove
Royal Bank of Scotland

US Company Announcements:

Merck & Company Inc
Exxon Mobil Corporation
AbbVie Inc
Chevron Corporation
Charter Communications
Caterpillar Inc
Dominion Energy
Colgate-Palmolive Company
Illinois Tool Works Inc
Aon PLC

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