The coming week brings a mountain of market-moving news on the US economy and companies for twitchy traders and investors to chew on, with the Federal Reserve front and center.
More than 20 IPOs are expected in a monster week for initial public offerings of stock, with investors anxious to get a feel for the demand for this new equity. Any drop in demand could spell trouble for stock markets that many feel are ready for a correction.
At 2pm on Wednesday, the Federal Open Market Committee will release its much-awaited monetary policy statement, with markets anxious to read the nuances of the Fed’s take on the economy and to try and gauge when the Fed will raise interest rates back towards normal levels.
The Fed had made sure its key interest rate has remained near zero for more than five years as it helped nurse the US economy back the health after the financial crisis — but many experts say it is now time to expect a return to higher, normal interest rates.
Investors expect the Fed to continue reducing or “tapering” its controversial buying of treasury and mortgage related bonds by $10 billion a month, continuing the “taper” towards an anticipated ending of the bond buying program after its October meeting.
Creating such artificial demand for Treasury and mortgage debt — and forcing down the interest paid on that debt — played a huge role in keeping rates so low for so long.
Earlier on Wednesday, at 8.30am, the US Commerce Department is expected to publish figures on second-quarter Gross Domestic Product (GDP).
Investors had been expecting a GDP growth rate of 3.2 percent for the second quarter after the harsh winter put a dent in first quarter growth, but mixed data in recent weeks has led some to question such optimism.
So, Wednesday could be a volatile day in the bond and stock markets.
On Friday morning at 8.30am come figures on US job creation in July, with economists expecting another better month.
Company earnings season also continues, with firms that report including
Wednesday could bring the biggest US IPO of the year so far as Synchrony Financial, a consumer credit business being spun off by General Electric, looks to raise more than $3 billion in an offering that could value the whole of the company at roughly $20 billion, even though GE is expected to retain a roughly 85 per cent stake in the business.
