@ Wall Street next week
The soft patch not just in the U.S., but globally is jangling politicians' nerves, leading to last week's surprise move by IEA members to release 60 million barrels of oil out of strategic reserves (with the U.S. contribution at 30 million). The move quickly took about $5/barrel off oil prices (worth a bit more than ten cents off the pump price for gasoline). Time will tell whether that extra stimulus is worth the risk of creating the perception that the IEA is trying to manipulate the price rather than responding to a supply disruption.
The oil move came just a day after the Fed made clear that, for the moment, it has no plans to do more to help. The flow of data during the week was generally soft, with home sales falling and initial unemployment insurance claims rising, although durable goods orders were up a little more than expected. In Washington, the debt ceiling talks stalled as Republicans walked out, refusing to consider any tax increases as part of a deal.
Markets seem unconcerned over the impasse at this point, but as the clock keeps ticking towards August 2, that may change. The releases in the upcoming week will shed more light on how long this soft patch will last and whether it gets worse.
The personal income report (Monday, June 27) should show that after adjusting for inflation, consumer spending was down and income gains were weak in May. The Case-Shiller numbers (Tuesday June 28) will show the pace of decline in housing prices moderating during April, but only because of a pronounced seasonal factor. Friday (July 1) will be the busiest day of the week. The key release will be the ISM manufacturing survey for June, which seems sure to be weak, maybe even below neutral for growth.
The construction update for May will shed more light on whether private nonresidential and multi-family construction have at last turned the corner. Finally, auto sales for June are expected to be unchanged from May.
@ The White House
The President has no public events scheduled this weekend.
