Fundamental Comment

Economic Week: PMI data for May, FOMC minutes

Economic Week: PMI data for May, FOMC minutes

Financial markets' participants will be on a date with a number of important economic data this week, led by Purchasing Managers’ Index data for May and the U.S. FOMC minutes, in addition to the continuous follow-up to the latest developments of the Coronavirus and its impact on global financial markets.

The flash manufacturing and services PMI due form major economies this week, including the U.S., euro area and U.K. will be of paramount importance, as they will mirror the status of economies after the ease of some of the restrictions imposed to contain the Covid-19.

The preliminary PMI figures may point to a start of recovery after hitting a trough in April, especially the services sector.

In May, some companies have started to restart their operations, as governments announced easing of some of the lockdown measures.

However, the improvement may not be significant, as there are still some of the restrictions imposed on people and businesses, noting that the final reading could witness an upside revision as many economies have reopened their economies.

Last month’s dull reading may have absorbed the widespread shutdowns that affected economic activity, and therefore the flash May reading is predicted to be better than April.

Investors should also focus on the FOMC minutes for the latest Fed meeting, as it should divulge some details about the discussions between policymakers, most notable on the newly launched ETF corporate bond buying program.

Fed Chair Jerome Powell will testify on Coronavirus Aid, Relief, and the Economic Security Act before the Senate Banking, Housing, and Urban Affairs Committee in Washington DC.

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