Monday, June 5, 2023

Date in the US that hits the markets: Catalina Edwards

Debt limit talks, minutes of the Federal Reserve’s last meeting and an escalation in the tech war between China and the US marked the start of a week that will move markets.

The North American press refers to “Date X” to refer to the day the United States Treasury Department runs out of resources. Goldman Sachs estimates that this will happen between June 8 or 9. That is, when there is less than $30,000 million in the fund, it is treated as the minimum floor to comply with federal obligations.

This expenditure cap is, in essence, a good way to control fiscal deficit and public expenditure. If the credit limit is reached, the authorities must seek permission and negotiate to get more resources. But as the deadline approaches, investors panic and the scenarios that unfold are disastrous.

The tone has risen among negotiators, including President Joe Biden, and a deal appears likely to be lost this week.

But this is not the only reason which gives stress to the markets… If we talk about stress, these days the technical war between China and America is getting deeper. This Sunday, Xi Jing Ping’s government asked users of computer equipment considered sensitive not to buy products from Micron Technology, the largest maker of memory chips in the United States.

We’ll see if the good performance of Wall Street’s indicators can keep up with these concerns. The Nasdaq and S&P 500 posted their best week since March, despite Friday’s declines.

For macro data, we will have many lights on the path the Federal Reserve may take. On the one hand, we’ll learn the minutes of the last meeting and the personal consumption deflator, or PCE, the preferred data to measure the impact of inflation on Americans’ wallets. Experts say it is difficult for PCE to fall substantially below 4.2%, thus making it an acceptable level for the Fed. Everything remains to be seen…

Milestones of the week

Tues 23

  • Chile: BC holds fiscal policy meeting
  • Germany: PMI
  • United States: Building Permit
  • United States: PMI

Wednesday 24

  • Chile: Central Bank publishes Financial Stability Report
  • Chile: INE publishes producer price index
  • United States: Fed Minutes
  • United Kingdom: CPI
  • Germany: IFO Business Confidence Index

Thursday 25

  • Germany: GDP first quarter
  • United States: First Quarter GDP

Friday 26

  • United States: Personal Consumption Deflator (PCE)
  • United States: Durable Goods Orders
  • United States: Consumer Confidence University Michigan

Nation World News Desk
Nation World News Desk
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