• Wall Street awaits a week full of hawkish Fed speak
• Global risk aversion settles in as PBOC stimulus disappoints
• US-China relations improve but no significant breakthroughs are expected

US stocks are starting on softer footing on disappointment from the PBOC’s stimulus efforts for the struggling property market and on expectations Fed Chair Powell will defend the FOMC’s dot plots. ​ Improving sentiment with US-China relations was somewhat faded as the yuan was fixed at the lowest levels since November. ​ China has a habit of playing nice when they let the yuan weaken. ​ Secretary of State Blinken’s trip was constructive enough that he was able to meet with Chinese President Xi Jinping. ​ This was the first visit by a US Secretary of State to China since 2018, which was initially going to happen earlier in February, but was called off due to a suspected spy balloon. Any momentum from Blinken’s trip was expected to be short-lived as China’s not budging on Taiwan, and they will continue to trade with Russia, despite pressures from Washington DC. ​

US data

Housing data for the month of May showed the best rebound since 2016 as inventories for homes remain at low levels. ​ Housing starts surged 21.7%, much higher than the expected 0.1% dip, and huge improvement from the revised -2.9% prior reading. ​ Building permits rose from -1.4% to 5.2%. ​ Demand for houses appears to be strong and that should help that part of the economy get out of a recession. ​

The problem for the Fed is that the inflation fight was so used to a weakening housing market but that appears to be bottoming out. ​

S&P 500 Index

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Ed Moya

Senior Market Analyst, The Americas at OANDA

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.

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