Inflation will peak next week during the first full trading week in June.
Investors will get the latest indicator of how quickly prices are rising in the US when the Bureau of Labor Statistics releases its latest consumer price index on Friday.
The move comes as Federal Reserve policymakers rush to curb inflation highs over the past 40 years with rising interest rates, while raising concerns that the measures could moderate economic growth.
Highlighting that likelihood, and the possibility that the Fed’s rate hike campaign will continue beyond the next two meetings, was the employment data for Friday in May.
The Department of Labor’s employment report showed a slightly slower pace of hiring since April, with 390,000 jobs added to the U.S. economy in May, despite global growth in employment. employment remains robust on a historical basis.
“Overall, the jobs report reinforces the strength of the economy as a whole, but it also indicates that the Fed still has work to do for them and may need to continue with the 50-point rate hikes basic during the fall months, “Charlie Ripley, a senior investment strategist at Allianz Investment Management, said in a note.
These worries caused the three main indices to fall on Friday to another weekly loss after a temporary rebound ended in four trading days shortened by the holidays.
“The job posting sent a statement to investors that the recovery is still in full swing,” Peter Essele, head of portfolio management at the Commonwealth Financial Network, said in a statement. “The other side of this coin, however, is that inflation will continue to be a problem due to strong consumer demand, wage pressures and rising commodity prices.”
The main CPI index is expected to rise in May, but remains steady compared to last month’s reading on a year-on-year basis. Economists predict that the broader CPI measure rose 8.3% in May, on par with the April advance. During the month, the CPI is expected to show an increase of 0.7%, compared to 0.2% last month.
The story goes on
The basic measure of the index, which excludes volatile food and energy prices, probably slowed to 0.5% monthly from 0.6% in April and 5.9% annually from 6.2% from the previous month.
“The inflation rate moderated slightly in April and we will have to see it followed by a sharper slowdown in May to underline the idea that inflation has peaked,” the financial analyst said. Bankrate chief Greg McBride in an email comment. “Even then, it will take many months of more moderate price readings for the inflation rate to drop significantly.”
This sentiment has been shared recently among Federal Reserve political leaders, including Vice President Lael Brainard. On Thursday, the current central bank’s No. 2 official said there were likely to be half a percentage point increases in interest rates this month and next, along with continued tightening thereafter.
“It’s very difficult to see a break right now,” Brainard told CNBC in an interview on Thursday. “We still have a lot of work to do to reduce inflation to our 2% target.”
Fedspeak will be shutting down as officials enter a shutdown period ahead of their next policy-making meeting, which will take place June 14-15. It seems likely that a half percentage point increase will be announced after this discussion.
U.S. President Joe Biden meets with Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Janet Yellen to discuss the economy at the White House Oval Office in Washington , DC, USA, May 31, 2022. REUTERS / Leah Millis
Outside of Friday’s CPI print, investors expect a light-weight economic and earnings schedule next week, but volatility is expected to persist as Wall Street prepares for more restrictive financial conditions and weighs in. American economy in limbo.
Although the government figures show a stark contrast to what some business leaders see ahead.
Tesla (TSLA) CEO Elon Musk warned of a “super bad feeling” about the economy, saying the company is expected to cut about 10% of jobs in an email to executives, Reuters reported on Friday, while urging management to “pause all hiring.” around the world”.
The comments echo the remarks of JPMorgan Chase (JPM) chief Jamie Dimon, who warned of a “hurricane” that will affect the US economy and a weaker outlook reported by the technology company Microsoft (MSFT), which cited more specifically the expected disruptions due to currency volatility. .
Not everyone is convinced that these warnings indicate a rolling economy. As Greg Daco, chief economist at EY-Parthenon, told Yahoo Finance on Friday, May employment data suggests that the drum of death and the approaching sadness is “misleading” in the context of ‘a labor market that is still growing.
“While the economy is likely to slow in the coming months, the anecdotal evidence of a freeze and layoffs on technology companies is misleading, as overall job offers are still close to record highs. and layoffs at a minimum, “Daco said.
–
Economic calendar
Monday: No reports are scheduled for release.
Tuesday: Trade Balance, April ($ -89.2 billion projected, $ 108.9 billion in the previous month); Revisions: Trade balance; Consumer Credit April ($ 32.75 billion expected, $ 52.435 billion in the previous month)
Wednesday: MBA mortgage applications, week ended June 3 (-2.3% during the previous week); Wholesale trade sales month by month, April (1.7% during the previous week); Wholesale month-on-month inventories at the end of April (2.1% forecast, 2.1% in the previous week)
Thursday: Initial unemployment claims, week ended June 4 (200,000 during the previous week); Continued claims, week ended May 28 (1.309 million during the previous week); Household change in net worth, Q1 ($ 529.7 billion); June U.S. Bloomberg Economic Survey.
Friday: Consumer price index, month to month, May (0.7% forecast, 0.3% for the previous month); Underlying CPI, month to month, May (0.5% forecast, 0.6% during the previous month); Consumer price index, year-on-year, May (8.3% forecast, 8.3% during the previous month); Underlying CPI, year-on-year, May (5.9% forecast, 6.2% during the previous month); Real hourly earnings, year after year, May (-2.6% during the previous month), Average weekly real earnings, year after year, May (-3.4% during the previous month), University of Michigan sentiment , preliminary June (58.7 expected, 58.4 during the previous month); Monthly Budget Statement, May ($ 308.2 billion in the previous month)
–
Earnings calendar
Monday
Prior to market opening: No outstanding reports are scheduled for release.
After the market closes: Coupa Software (COUP)
Tuesday
Before the market opened: The JM Smucker Company (SJM), Cracker Barrel (CBRL), Dave & Buster’s (PLAY)
After the market closes: There are no outstanding reports scheduled for release.
Wednesday
Before the market opens: Campbell Soup (CPB)
After market close: Five Below (FIVE)
Thursday
Prior to market opening: No outstanding reports are scheduled for release.
After market close: DocuSign (DOCU), Stitch Fix (SFIX), Rent the Runway (RENT)
Friday
There are no featured reports scheduled for release.
–
Alexandra Semenova is a Yahoo Finance journalist. Follow her on Twitter @alexandraandnyc
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard and LinkedIn