The two day Fed meeting this week will be the major event for markets here and around the world.
The Fed will leave interest rates on hold at 0.25% following its meeting but the post meeting statement will be watched closely to see whether it steps up its purchases of Treasury bonds following the rise in bond yields this year. (10 year bonds closed at $3.78% on Friday night, up over 1.2% since mid March, but down from the 3.99% close a couple of weeks ago).
The US Treasury’s record $US104 billion worth of bond auctions this week could also keep share markets on edge.
What investors are looking for from the Fed is more commentary on the state of the economy and something more definite on interest rates, such as a clearer statement on how long the present 0%-0.25% range will hold for.
The Fed might signal a desire to buy more mortgage bond securities, or even do it this week to send a signal that the recent rise in mortgage rates (and slump in mortgage applications) is overdone and should be reversed.
Data for house prices, sales of houses, durable goods orders and the final consumer sentiment reading for the month will also be released.
The housing data will be watched closely for further signs of stabilisation or improvement.
New home starts and building permits rose last month, and there seems to be an easing in the backlog of unsold houses, although that could be from disillusioned owners taking their homes of the market.
In the coming week, Federal Reserve Chairman Ben Bernanke is scheduled to testify on Thursday at a congressional committee hearing on the Bank of America-Merrill Lynch merger.
Household retailer Bed Bath & Beyond, agricultural chemical group, Monsanto Co , homebuilder Lennar Corp and sneaker maker Nike Inc are due to report earnings this week, as well as Palm, Inc, Oracle Corp and Micron Technology.
Existing home sales are expected on Tuesday and new home sales the following day.
Other economic data next week includes a report on durable goods orders for May on Wednesday and data on the final US first-quarter reading on gross domestic product on Thursday along with weekly jobless claims.
On Friday, May personal income and spending figures will be released, followed by the final reading for June from the Reuters/University of Michigan consumer sentiment index.
Euro-zone business confidence data for June could show a further improvement.
But that isn’t much in the way of good news, as production and exports are still weak in Europe.
Key Japanese economic data for May will likely be mixed when released this week.
The latest economic forecasts from the OECD are due mid-week.
The key one will be the view on 2010. The IMF is in the process of lifting its outlook, according to statements from senior officials last week.
It will be a quiet week in terms of Australian data with only the Australian Bureau of Statistics figures on new car sales for May to be released, and the latest commodity forecasts from the Australian Bureau of Agricultural And Resource Economics (ABARE).
