“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
― Howard Marks

1. U.S. Retail Sales Drop, Hinting at Shift to Spending on Services — the total value of retail purchases fell 1.3% in May following an upwardly revised 0.9% gain in April, Commerce Department figures showed Tuesday. The median estimate in a Bloomberg survey of economists called for a 0.8% decrease. For the last year, demand for goods has been propped up by elevated savings supported by fiscal stimulus, bringing total retail sales well above pre-pandemic levels. The May decline in retail sales suggests that as travel picks up and entertainment venues reopen, spending on goods is starting to moderate.
2. U.S. Talking to China on Boeing 737 Max Approval — The Biden administration is engaging with China in an effort to win approval for Boeing Co.’s 737 Max planes, which remain banned in the country even as other jurisdictions have reauthorized it following crashes. the two countries have yet to resume formal trade negotiations since President Joe Biden took office and initiated a broad review of China relations. Raimondo brought positive news for Boeing, with the U.S. and the European Union agreeing to extend a tariff truce for five years — parking a dispute over aircraft subsidies given to Airbus SE and Boeing that saw the allies impose duties on $11.5 billion of each other’s exports.
3. Fed Signals Earlier Interest-Rate Rise — Fed officials signaled interest rates will rise sooner and faster than previously expected, a surprise development that comes as inflation runs much hotter than officials have anticipated. Seven officials now expect to lift interest rates next year, up from four officials in March. More important: All but five members think rates will need to increase in 2023. In March, only 7 thought so, with 11 members expecting to keep rates pinned at zero. Markets have been expecting no change in rates before 2024. And more important still is the fact that five officials now see rates at 1% or higher in 2023, suggesting rates won’t just rise sooner but faster. The Fed’s statement Wednesday said it would continue buying $120 billion a month in Treasuries and mortgage-backed securities, but Powell opened the door to a tapering announcement during his press conference.

The week ahead — Economic data from Econoday.com:

This entry was posted on Monday, June 21st, 2021 at 4:52 pm and is filed under Weekly Summary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.