Breakout

Big week looming with Fed, housing and inflation data on tap

Stocks were on edge last week as the situation in the Iraq devolved into chaos, and central banks like England were talking intrerest rate tightening. With than in mind, there's another big week on tap and investors need to keep a keen eye on the market-moving data that's coming up.

We've seen exogenous factors like the situation in Iraq hit stocks, but this week we look stateside as the FOMC begins its two-day policy meeting. Investors are eying a policy statement coming out on Wednesday afternoon, and a Janet Yellen press conference to follow. The press conference with the head of the FOMC is given every quarter, and last time Yellen spoke she inadvertantly moved markets when she suggested tightening, or a rate hike, may come sooner rather than later.
Rick Newman in the attached video says don't be surprised is something is mistakenly said by the chairperson, but in all likelihood it will be quite a tame affair. Expect the FOMC to continue with a $10 billion taper to its bond-buying program and maintaining of the Fed's funds rates at 0 to 0.25%
One thing that might be even more important than the FOMC policy statement is the CPI, or inflation data coming out on Tuesday. Inflation is expected to be muted again during this reading, but don't tell that to Main Street. Newman notes consumers have been hit by rising food costs, and energy prices are starting to perk up as well. That being said, the street expects top-line CPI to hold steady at around 2.0%, and core-CPI, which excludes good with volatile price swings like food and energy, to remain at 2% as well. It will be interesting to see if these two figures stay so closely in line.
Housing starts for May will be released on Tuesday as well. The street is expecting a slight retracement in May data after a 13.2% surge was reported for April. Perhaps an improving U.S. housing situation can surprise on the upside, giving stock a lift on Tuesday morning.

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