MARKET TRENDS: Summary for the Week Beginning July 06, 2015

This week starts with the Greek referendum on Sunday, followed by the U.S. ISM Non-Manufacturing PMI on Monday, JOLTs Job openings and Trade Balance on Tuesday, and the FOMC Meeting Minutes on Wednesday. The week will end with the Wholesale Inventory data. The concerns for this week are about the U.S. dollar restraining economic growth to some extent after other transitory factors in the first quarter have dissipated. The Greek crisis has dominated the news. Banks are closed and ATM card withdrawals amounts have been reduced, as the country defaulted on a 240 bn Euro loan. All eyes were on the referendum on Sunday.

ISM Non-Manufacturing PMI: The Institute of Supply Management, an indicator of the level of business activities in the service sector, is scheduled to release its Non-Manufacturing PMI on Monday. The pace of growth in the U.S. services sector is expected to have slowed in June from the previous month.

The Index is expected to move up slightly to 56.2 in June from 55.7 in May. The largest sector, services, has seen a slowdown in May with 55.7 points, below its expected level of 57. The drop includes a slide in the employment component from 56.7 to 55.3 points. The reading is still above 50, which indicates expansion. The Business Activity Index is expected to have surged to 60 in June from 59.5 in the previous month.

JOLTs Job openings (Tues): The report on the survey conducted by the U.S. Bureau of Labor Statistics, which helps to measure the job vacancies, is scheduled for Tuesday. Job openings likely reduced to 5.35 mn in May from 5.376 mn the previous month. Manufacturing has been softer, particularly in the energy industry, which is hurt by lower oil prices.

Trade Balance (Tues): The U.S. trade balance is expected to have expanded to $42.6 bn in May, compared to a 10% contraction in April to 40.9 bn, on a drop in imports. A wider deficit does not bode well for hopes that the U.S. economy was stronger in the second quarter.

Focus will be on exports that have been pressured by the rising dollar. A stronger dollar has slowed the demand for U.S. goods by foreign purchasers, while imports have gone up. Exports increased to $189.9 bn in April from $188.0 bn in March, while imports declined to $230.8 bn from $238.6 bn in March, including consumer goods and services.

Consumer Credit (Tues): The market expects total consumer credit to have been reduced to 18.25 bn in May, down from 20.54 bn in April, after a drop in consumer confidence. Consumer credit includes cards and loans, known as revolving credit, and auto and student loans, known as non-revolving credit.

The Michigan Consumer Confidence Index dropped to 90.7 in May from 95.9 in April, but the Index was higher than the estimates. In April, consumer credit jumped by 7.3%, with an 11.6% and a 5.8% rise in revolving and non-revolving credit, respectively. Credit card loans have touched five-year highs recently after a sharp drop in the first quarter. The drop was caused by lower consumer sentiment and lower confidence due to uncertain economic conditions.

FOMC Meeting Minutes (Wed): At an earlier meeting in June, the Fed downgraded their assessment for growth in 2015 and published a lower dot plot. It’s likely that the overall tone of the Federal Open Market Committee (FOMC) minutes will be dovish. In addition, worries about Greece, the state of inflation, and other topics will be in the limelight.

Wholesale Inventories (Fri): The U.S. Department of Commerce will release Wholesale Inventories data on Friday, which likely grew at a slower pace than the previous month. The market expects a 0.3% rise in Wholesale Inventories in May, down slightly from a 0.4% rise in April.

Market Trends is a daily analysis courtesy of Fund&Grow, the industry leader in zero-interest business funding. Interested in $50,000 to $250,000 of business credit with no impact on your personal credit? Get funded now. We also offer a free online seminar showing how the Fund&Grow business funding program works.