The Week Ahead: May 29-June 4, 2017

Congress on holiday recess | White House in focus | Trade policy | Perdue in Montana

Both the House and Senate are out for a Memorial Day break, so the focus will be on the White House.

There are reports that a potential major shakeup is being mulled in the White House. Russia continues as a key focal point, with various investigations and major media news alerts on the topic of Russia’s alleged interference with U.S. elections.

More sub-Cabinet positions are expected to be announced by the Trump administration for various agencies.

Montana Ag Summit begins today. The Montana Chamber Foundation teamed up with U.S. Sen. Steve Daines (R-Mont.) to host the summit in Great Falls that begins today and runs through June 1. USDA Secretary Sonny Perdue, Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) and J. Christopher Giancarlo, acting chairman of the Commodity Futures Trading Commission, will be joining Sen. Daines. Perdue will speak on Thursday and then heads to Idaho.

Trade policy is another focus, with a potential US-Mexico sugar trade suspension announcement the key item of note. The Commerce Department has warned that it will hit Mexican sugar imports with duties if no resolution is reached by June 5.

Vietnamese Prime Minister H.E. Nguyen Xuan Phuc comes to Washington this week for an event with business leaders and a meeting with President Donald Trump at the White House. Phuc is Vietnam’s head of government but reports to President Tran Dai Quang. The Vietnamese leader may be looking for a bilateral trade agreement with the U.S. now that President Trump has pulled the U.S. out of the Trans-Pacific Partnership (TPP), and Trump will likely raise the $32 billion deficit in goods trade the U.S. experienced with Vietnam last year. Both Phuc and U.S. Trade Representative Robert Lighthizer are expected to discuss the future of the trade relationship at an event tonight at the U.S. Chamber of Commerce.

U.S. steel producers, and the manufacturers who rely on steel, will have until May 31 to weigh in on whether the U.S. should impose tariffs, quotas or other protective measures against steel imports in the name of national security. The Trump administration is undertaking a rare “Section 232” investigation into the steel imports. Some domestic producers have pushed for protective measures, saying foreign steel is driving them out of business, which could be a problem if a national security crisis restricts U.S. access to foreign steel.

Lots of economic updates in the holiday-shortened week ahead. With markets and the US government closed Monday in observance of Memorial Day, that condenses the week’s economic reports into four days, and there are some key reports due. Tuesday will see the release of data on Personal Income & Outlays, S&P Corelogic Case-Shiller HPI, Consumer Confidence and the Dallas Fed Manufacturing Index with Wednesday releases including Chicago PMI and Pending Home Sales Index. Thursday has the fullest schedule with ADP Employment, Weekly Jobless Claims, Productivity & Costs, PMI Manufacturing, ISM Manufacturing and Construction Spending. Friday closes out the week with the key Employment report and International Trade figures. With the upwardly revised consumer component to first quarter GDP, traders will watch to see if that continues in releases during the week. But the big attention, as usual, will be on Friday’s jobs data and how or if that alters expectations for the Fed June 13-14 meeting. Plus, the month of May comes and an end and we arrive at June which always can impact trade activity and the weekend G7 meeting could also bring new updates.

It is a relatively light week for Fed officials with only Dallas Fed’s Kaplan (2018 voter) and San Francisco’s Williams (2018 voter) to speak Wednesday – Williams is also on the schedule for May 28. The other attention point will be the release of the Fed’s Beige Book that arrives two weeks ahead of the next Federal Open Market Committee (FOMC) meeting. That data usually does not provide a lot of market-moving data, but it will still be watched for signals on consumer activity, housing and any other economic anecdotes that could play into the Fed’s next meeting and moves. Attention on the Fed speakers for the week will stay on whether June is still a live meeting for a rate rise and if there are any more hints on the balance sheet plan.

Today is the key day for agriculture markets as that will bring the first condition ratings for corn and soybeans for the 2017 growing season. That update in the Crop Progress report looms large as traders continue to gauge production prospects for the year ahead. If the ratings are disappointing, that could spark a price rise for both commodities. It will also mark the shift in focus on planting to how the crops are moving through the growing season. After a condition rise for winter wheat, traders will want to see if today’s USDA update shows another increase after more rains in wheat country. Grain Inspections today and the Weekly Export Sales report (Friday) still will get attention on the demand side of the equation. Thursday brings the monthly industrial reports from USDA, including Fats & Oils and Grain Crushings along with cotton data. The April trade figures will be recapped by USDA Friday afternoon via the Latest U.S. Agricultural Trade Data report. Weather will be important, especially depending on what today’s update on corn and soybean condition ratings shows.