The Week Ahead: June 13-19, 2016

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Lingering issues continue in Congress in the week ahead, including appropriations work and a hard-to-get agreement in the Senate on a GMO food labeling measure. It still is unclear on whether lawmakers will be able to come to some kind of a compromise on moving the annual spending bills ahead. The main economic focus comes Wednesday when the Federal Open Market Committee will conclude their latest two-day meeting.

There are a few hearings on appropriations bills in both the House and Senate, but not a lot as the process for moving those fully forward remains uncertain.

The Senate will turn to a funding measure for Commerce, Justice and Science projects such as space exploration. In the House the focus turns to funding for defense programs.

Senate action is possible on legislation to address Puerto Rico’s $70 billion debt. The measure, HR 5278, which would create a seven-member board to managing a restructuring of the island’s debt, won House passage on a 297-127 last week. Lawmakers are facing a July 1 deadline when Puerto Rico’s next major payment is due to bondholders. President Barack Obama supports the measure.

Senate spending. The Senate Appropriations Interior and Environment and Financial Services and General Government subcommittees plan markups Tuesday and Wednesday of their funding measures. The full committee will take up both bills on Thursday.

The House Appropriations Committee is scheduled Tuesday to mark up the Homeland Security spending bill. The $41.1 billion bill would boost funding for the Transportation Security Administration and would bar implementation of Obama administration executive actions on immigration pending the outcome of a legal challenge. The House Appropriations Committee also plans Tuesday to mark up its Interior-Environment legislation.

IRS measure. The House may take up a measure that would prohibit the Internal Revenue Service from requiring tax-exempt organization to identify their donors in most cases.

Zika virus. Negotiators from both chambers will be working on a compromise package that includes money to combat the Zika virus.

Key hearings of note. A House Ag subcommittee will look at the G20 clearing and trade requirements while another panel will look at antibiotic resistance in humans and House Ways and Means Committee on Tuesday will hold a hearing on eliminating barriers to US agriculture exports. A Senate panel will look at the Securities and Exchange Commission while another hearing topic will be on gas pipeline infrastructure.

SEC oversight. Securities and Exchange Commission Chair Mary Jo White is scheduled to testify Tuesday before the Senate Banking, Housing and Urban Affairs Committee.

Energy taxes. The Senate Finance Committee plans a hearing Tuesday on energy tax proposals that could be part of a larger tax overhaul the committee’s chairman, Utah Republican Orrin Hatch, hopes to achieve.

Russia policy. Former US ambassador to Russia and director of the Freeman Spogli Institute for International Studies at Stanford University, Michael McFaul, and former US ambassador to the Soviet Union and fellow at Duke University, Jack Matlock, are among those scheduled to testify Tuesday before the House Foreign Affairs Committee about US policy toward Russia.

Lots of updates on the US economy roll in during the week ahead, opening with updates Tuesday on Retail Sales, Import & Export Prices along with Business Inventories. Wednesday will bring the PPI-FD, Empire State Manufacturing and Industrial Production reports with Thursday releases on CPI, jobless claims, Philadelphia Fed update and the Housing Market Index. Friday’s data updates include Housing Starts and the Atlanta Fed inflation expectations. Traders will continue to gauge each release relative to what it suggests for the US economy, but also how it may play into the potential for a rate increase in July or later in the year. China markets will reopen for trading Monday and additional economic updates there could have an influence in how they and other regional markets trade ahead.

The major Fed focus is on Wednesday when the Federal open Market Committee will conclude their latest two-day meeting. While no policy moves are expected, the focus will be on how the Fed characterizes the US economy and more importantly about any timing clues on the next rate increase. But traders won’t have to perhaps guess a lot on that front since the meeting will also see the release of updated Fed projections, including the level they expect the Fed funds rate to be at by the end of the year. Plus, Fed Chairwoman Janet Yellen holds a press conference, so reporters no doubt will try to get her to give some kind of signal on when the Fed expects to next increase short-term interest rates.

The report schedule is lighter for agriculture in the week ahead, with the Crop Progress update on Monday. That will be watched to see if the hot temps that invaded Corn Belt areas late in the week and over the week have lowered any crop condition ratings. Thursday’s Weekly Export Sales report will be watched for levels of corn and soybean sales in particular, with traders hopefully already aware that more than USDA announced over 500,000 tonnes of soybean sales for 2016/17 and some for 2015/16 that will fall into the reporting period. USDA economists will also update the Livestock, Dairy & Poultry Outlook situation, one which will provide more perspective to the Supply/Demand update issued Friday. Weather, of course, continues as a key for markets moving ahead and the survey period for the June Acreage report will mostly wrap up in the week ahead.

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.