FOMC Minutes Could be a Sparse Week’s Highlight

• After a holiday-shortened week, this one arrives with the summer doldrums dead ahead. The data offerings are thin and decidedly second-tier, so don’t look for any guidance in that direction. The highlight could well be the FOMC minutes from the June 17 meeting with new Fed Chair Warsh presiding. While Warsh worked hard to limit the information flow from the press conference, and statement, the minutes may offer a few new insights. We discuss the possibilities springing from the minutes below, along with the few releases that may create a market ripple this week.  Currently, the 10yr is yielding 4.46%, down 2bps on the day, while the 2yr is yielding 4.11%, down 2bp2 on the day.

• The ISM Services Index for June will be the first of few consequential releases this week. The overall index is expected at 54.2 vs. 54.5 in May. That stable picture of expansion is like most of the June activity reports we’ve already seen. Much like the manufacturing sector, the Prices Paid Index will receive plenty of scrutiny with the index expected to slip slightly to 70.1 vs. 71.3. Meanwhile, New Orders are expected to be stable at 57.5 vs. 57.3 in May. Finally, the Employment Index is expected at 48.1 vs. 47.9, slightly better than May but keeping employment at or near in breakeven which lines up with the June jobs report we received last Thursday.

• Tomorrow, the Trade Balance Report for May will be released with a widening of the deficit expected, from -$55.9 billion to -$78.7 billion. Earlier last week, the goods trade balance widened and that was due to an uptick in imports while exports fell. That deficit widened from -$83.0 billion to -$105.8. This report brings in the services side of the equation and that’s where the US has an advantage with much larger exports of services vs. imports and that’s why the expected deficit is almost half the goods-only deficit.

• Wednesday’s highlight, and possibly the week’s, will be the FOMC minutes from the June 17 meeting. With the abbreviated post-meeting statement and with new Fed Chair Kevin Warsh declining to offer forward guidance, or the Fed’s reaction function, the minutes may provide more insight into the discussions. In any event, it will be an interesting release that investors will be pouring over to glean whatever additional nuggets of information they can.

• In addition to the weekly jobless claims series, Thursday also brings Existing Home Sales for June with 4.23 million sales closed vs. 4.17 million in May. That would represent a 1.9% increase in sales but still indicative of a market still searching for positive momentum. Existing sales have been mired in a range between 3.9 million and 4.27 million since 2023 and there’s not much on the horizon to indicate any new catalyst to drive sales activity higher.

Fed Funds Futures See September FOMC Meeting as a Real Chance for Rate HikeSource: CME Group

June ISM Services Expected to Decrease Slightly to 54.2Source: ISM

June Existing Home Sales Expected to Increase Slightly to 4.23 million AnnualizedSource: NAR