The week ahead in terms of market moving events can be broken down into two key events, firstly the FOMC meeting minutes, and then the Non-Farm Payrolls jobs report.
On Wednesday the Federal Open Market Committee releases minutes from its mid-June monetary-policy meeting. This is going to be a huge event for traders and investors and should set the market tone until at least Friday.
Last month the FOMC raised the federal-funds rate by 75 basis points to 1.50% to 1.75% at that meeting, marking the largest rate increase for the US central bank since 1994.
Given recent commentary from Powell and other Fed member we are likely to see a coin toss in regard to how the market takes the Minutes release. Market watchers are still on the fence in regard to whether we see 50 or 75 basis points increase this month.
Then on Friday we have the Non-Farm Payrolls jobs report. Most economists expect the rate of new jobs continued to decrease last month, with the consensus looking for 295,000 new payrolls.
This expected number would be lower than May’s 390,000, which is again lower than the 3-month average 408,000, the 6-month average of 505,000,plus the 12-month average 545,000.
Currently, money markets are assigning an approximately 70% chance that rates will be lifted by the larger increment, but if this Friday’s jobs number were to surprise to the downside, it could help pricing tilt back into the 50bps.
So in essence, bad news could be good news for US stocks and other risk-on assets. If the jobs market looks shaky, then Powell & Co may need to take their foot of the pedal.
Then we come to stocks and crypto. Both have been hammered over recent weeks, and both are probably extremely oversold at this current moment in time.
Basically, the Nasdaq needs to get above 12,000 to generate a breakout on the technical side, while Bitcoin needs to find buyers above the $20,800 level this week to secure its short-term prospects.