We are heading to what is probably one of the most anticipated weeks of the year so far. Aside from the usual economic prints we’d expect, on May 7, the Federal Reserve will announce its new interest rate policy decision, which will dictate the pace of the U.S. economy moving forward.
Monday, May 5 – Key Service Sector Data
Monday, also known as “today” for this writer, we’ll be seeing the reports of two key economic indicators. For starters, the U.S. Services Purchasing Managers Index (PMI) will be released, providing insight into the health and growth of the service sector. Forecasts anticipate a positive +50 print.
Later, we’ll check out the ISM Non-Manufacturing PMI, which evaluates the performance of the U.S. service sector, offering key insights into business activity, employment trends, and overall economic health. Once again, forecasts predict a 50+ print—highlighting optimism and expansion for the sector.
Tuesday, May 6 – 10-Year Note Auction
Tomorrow, the most anticipated report will be the 10-Year Note Auction by the U.S. Treasury, which will provide critical insight into investor demand for long-term government debt. The previous auction yielded 4.435%, meaning market participants will closely watch whether tomorrow’s results show an increase or decrease in yield.
- If the yield rises, it could indicate weaker demand, possibly reflecting concerns about inflation or expectations of further Federal Reserve rate hikes.
- If the yield falls, it may suggest strong investor appetite for Treasuries, signaling confidence in economic stability or expectations of rate cuts ahead.
Since the 10-year note serves as a benchmark for borrowing costs, its results could give us a hint of what to expect from the Federal Reserve’s interest rate decision, coming on the very next day.
Wednesday, May 7 — Jerome Powell On The Case
The day Donald Trump and everyone are looking forward to. On this date, the Federal Open Market Committee will announce the new—or old—interest rate decision.
However, despite the U.S. President’s frequent public demands for a rate slash, the likelihood that the Fed follows through with the requests is still slim. Last week’s negative Q1 GDP reading highlights a growing concern for expanding inflationary pressures, which will likely incentivize a more “risk-averse” sentiment from the Federal Reserve.
The Federal Reserve’s announcement will set the tone for markets, economic policy, and investor sentiment moving forward. While the market is anticipating the Fed maintaining the current 4.25% to 4.50% interests—we truly never know what will happen.
Thursday, May 8 – U.K. Interest Rate Decision
On the following day, it will be time for the Bank of England to decide its interest rate policy. Forecasts predict a 0.25% decrease in interest, with the current rate at 4.5%, according to the latest data.
Also on Thursday, the U.S. Department of Labor will reveal how many Americans filed for unemployment over the week as it releases the Initial Jobless Claims report. This data will provide insight into the state of the U.S. labor market, offering a glimpse into whether layoffs are rising or stabilizing.
Friday, May 9 – Not a Lot Going On
Friday, May 9, seems relatively quiet compared to the rest of the week, but there are still a handful of events worth noting:
- Central Bank Speeches – Multiple officials, including FOMC members Williams, Barr, and Waller, as well as BoE MPC Member Pill, will be giving remarks that could provide insight into monetary policy outlooks.
- NIESR Monthly GDP Tracker (April) – This U.K. data point offers a sneak peek into economic growth trends, which could help forecast broader market sentiment.
- Baker Hughes Rig Counts – This report tracks U.S. oil and gas activity, giving traders a pulse on energy sector developments and drilling activity.
- CFTC Speculative Net Positions – Data on gold, crude oil, Nasdaq 100, and S&P 500 positioning will help investors understand market sentiment and hedging activity.
While nothing groundbreaking is expected, these reports and speeches could still shape investor expectations heading into the following week.
