The Week Ahead: June 6-12, 2016

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Lawmakers return (Senate returns Monday and the House Tuesday) from the Memorial Day break, with the focus on whether House and Senate Republican leaders have a plan relative to moving the annual spending bills that they so far have been unable get completely through either chamber. The Supplemental Nutrition Assistance Program (SNAP) will be examined by a House panel while the military and VA appropriations package will be gone over in a Senate committee. And there is still no new update on whether or not Senate ag leaders can come up with a compromise regarding GMO food labeling.

The agenda. Defense policy, legislative branch appropriations and a financial restructuring plan for Puerto Rico’s $72 billion of debt are the key congressional items before lawmakers recess in mid-July for the presidential nominating conventions. Unknown is whether lawmakers can reach a compromise on Zika funding as part of planned conference negotiations on a broader appropriations package.

Ozone standards. The House plans to consider legislation, HR 4775, that would delay implementation of 2015 ozone standards by eight years.

Topics of key hearings include airport screening lines, bank liquidity regulation and Russia.

Trade policy topics of note include the annual US-China Strategic and Economic Dialogue being held in Beijing, while President Barack Obama hosts Indian Prime Minister Narendra Modi in Washington on Tuesday, and Modi will also give an address to a joint session of Congress. Meanwhile, International Custom Products is expected to find out June 6 whether the US Supreme Court will review a case the importer brought challenging US Customs and Border Protection’s reclassification of the company’s imports of dairy-based sauces.

We’re back to a full week but a light data flow. Economic updates aren’t plentiful for the week, with Monday bringing the Labor Market Conditions Index followed by Tuesday releases on Productivity & Costs and Consumer Credit. Weekly jobless claims and Wholesale Trade data arrive on Thursday with the week capped off by Consumer Sentiment and the monthly Treasury budget update on Friday. But traders will still monitor each data piece relative to whether it alters what are now declining expectations for the Fed to increase the range in the Fed funds rate relatively soon. Economic updates from China continue to be of note, with the expectations there focused on whether the data suggest additional economic stimulus measures could be on tap.

The blackout period for the Federal Open Market Committee arrives, but not before some Fed appearances take place. All of them are clustered on Monday, with Boston Fed’s Rosengren set to delivery remarks (he is a 2016 voter). But the major attention will be focused on two afternoon appearances by Fed Chairwoman Janet Yellen. Much of the focus will be on her first appearance at the World Affairs Council of Philadelphia. Traders will focus on whether she offers any additional signals on rate-increase timing or whether the surprising Employment report for May is a concern or not. Yellen is also scheduled to participate in a roundtable discussion later that afternoon at the West Philadelphia Skills Initiative. Her first speech is going to be a major focal point for financial markets to open the week.

US agriculture will focus attention on Friday when USDA will release its monthly Crop Production report, featuring the second survey-based estimate of the US winter wheat crop. The Supply/Demand report is also due that day, and attention will mostly be on global data, including whether and/or how much USDA adjusts its Brazilian and Argentine crop and trade forecasts. Hefty rains in Europe could also prompt USDA analysts to adjust crop expectations for the European Union (EU). Many expect USDA to boost its corn export forecast for 2015/16. Beyond the Friday release, attention will also be on Monday’s Crop Progress report as it will offer the first soybean condition ratings of the 2016 growing season. Being a full week, the Weekly Export Sales update returns to Thursday and it will continue to be of note.

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