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Major Indexes On Track For Modest Opening

The major indexes are on track for a modestly positive open, but they have lost ground the last few sessions, and it shouldn’t surprise if today’s session ends up in the red as well. Stocks were weak in Europe on soft Chinese data, while oil is making strong gains in today’s session.
On the data docket this week, we have reports on inflation, housing and the Fed. On the Fed front, we will get minutes from, the last FOMC meeting when the committee effectively downgraded its view of the economy. The subsequent weak April jobs reading only solidified the market’s interest rate view, but the Wednesday minutes will give us a clearer sense of the Fed’s economic outlook. Market participants don’t expect a rate hike at next month’s meeting, but I continue to believe that a strong jobs reading ahead of the June meeting will put June back into play.
We will likely see more momentum in this week’s inflation survey, with the ‘headline’ reading showing the effect of recent oil price gains. On the housing front, we will get the homebuilder sentiment index a little later today, the Starts data on Tuesday and Existing Home Sales on Friday. Industrial Production and the Philly Fed and Empire State regional manufacturing surveys are coming out this week, though the New York Fed’s Empire State survey missed the mark this morning.
The key is the market’s evolving Fed outlook, which likely wouldn’t change much in the coming days, at least through the next government jobs report. Next month’s British vote on the country’s place in the EU has emerged as a source of uncertainty as well. Some Fed officials continue to make hawkish noise, but the Chair and other key deciders on the committee are likely firmly in the dovish camp.

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