Market sentiment: RiskOn – 27 days
Recap of the past week:
The past week was marked by a plethora of speeches from central bankers, the results from nVidia, and the FOMC meeting minutes – important market topic lately. The central bankers and FOMC leaned towards a hawkish stance, exerting significant pressure on the markets. However, the phenomenal results from nVidia revitalized the market with a positive market sentiment. This upbeat mood was further accentuated by Friday’s Michigan Index, particularly its reduced inflation projections.
Outlook for the following week:
This week, all eyes will be on Friday’s PCE Index, especially its Core Index. The US CPI data from 14 days ago rekindled market hopes in the fight against inflation, and it’s expected that the final figures will heavily influence Friday’s trading. As of writing, official expectations are unknown. We anticipate that expectations will remain unchanged, and any figures below last month’s numbers will serve as a strong market stimulus. Conversely, any increase will dampen the optimism spurred by the recent US CPI. But there’s much more in economic calendar for this week:
Monday promises a typically slow start, exacerbated by the Memorial Day holiday in the US. Noteworthy events include a speech from BoJ Governor Ueda and the German IFO for May.
On Tuesday, the spotlight will be on speeches from central bankers of the FED, SNB, and ECB, which will play a crucial role. Additionally, we will see Australian Retail Sales, the US Housing Price Index, Consumer Confidence, and the Dallas FED Manufacturing Business Index.
Wednesday kicks off in Asia with the Australian CPI, followed by Germany’s GFK, Switzerland’s ZEW, and the macro event of the day: preliminary German CPI estimates. During the US session, we will receive the FED Beige Book and a 7Y US debt auction.
Thursday will be packed with data. We start with the Australian Building Approvals, followed by a press conference from SNB Chairman Jordan, Swiss GDP, Spanish Inflation, and the European Business Climate/Consumer Confidence/Economic Sentiment Indicator. The US session will bring the weekly job market overview, Core Personal Consumption Expenditures, an update on US GDP, and Pending Home Sales. The day concludes with a speech from FED’s Williams.
Friday, the main macro day of the week, begins with Japan’s CPI/Unemployment/Retail Sales and China’s PMI. In Europe, we will see German Retail Sales, French and Italian GDP, and preliminary European CPI estimates for May. The focus then shifts to the US with Canadian GDP and the week’s highlight, the PCE Price Index.
Long-term sentiment
The last week began with a Neutral sentiment as shown by our market sentiment indicator, but nVidia’s results breathed new life into the waning RiskOn sentiment wave. Whether this growth will sustain will likely hinge on Friday’s PCE data (though there are other significant events this week). Given the positive RiskOn sentiment, we will be looking for long trading opportunities.
Good luck! Team moodix!