FOMC on Wednesday Expected to Hike Rates 25bp But Then Hold for Months

Employment report Friday | Two Senate Ag subcommittee farm bill hearings

The House is out, returning May 9. The Senate is in. Key financial reports include the FOMC announcement on Wednesday and the Employment report on Friday. Senate Ag Committee subcommittees hold two hearings on a new farm bill (see details below).

The FOMC is widely expected on Wednesday to hike rates another 25bp, and then hold with that rate perhaps until the end of the year, although some private sector analysts think the Fed will be forced to lower rates later this year. The Employment report on Friday will be one of several reports ahead that will determine the interest-rate developments after this week. Also important will be Fed Chair Jerome Powell’s statements during his presser.

On the farm policy front, two more hearings on important topics (farm safety net and crop insurance), but the writing of the newbill depends on:

Settlement of the lingering debt-limit issue
May 12 forecast updates from the Congressional Budget Office (CBO) and
Whether or not the Ag panels will get additional funding from party and Budget panel leaders.

Washington Hearings and Other Events

Monday, May 1

• President Joe Biden bilateral meeting with Philippine President Ferdinand Marcos Jr.

• Farm bill and racial justice. American University summit on “Pointing the Farm Bill Toward Racial Justice,” concludes after beginning April 30.

• Social policies. Bipartisan Policy Center virtual discussion on “Divided Government: Advancing a Conservative, Pro-Family Agenda,” focusing on policies such as the Child Tax Credit, child welfare programs, and work requirements.

• U.S./Taiwan relations. Brookings Institution discussion on “U.S./Taiwan Relations: Will China's Challenge Lead to a Crisis?”

Tuesday, May 2

• Farm safety net. Senate Agriculture Commodities, Risk Management and Trade Subcommittee hearing on “Commodity Programs, Credit, and Crop Insurance - Part 1: Producer Perspectives on the Farm Safety Net.”

• FY 2024 Budget – Interior. Senate Energy and Natural Resources Committee hearing on “The President's Budget Request for the US Department of the Interior for FY 2024.” Interior Secretary Deb Haaland testifies.

• FY 2024 Budget – Asia Pacific. Senate Foreign Relations East Asia, the Pacific and International Cybersecurity Policy Subcommittee hearing on “FY 2024 Budget Request for East Asia and the Pacific.” Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink testifies.

• U.S./China relations. Henry L. Stimson Center virtual discussion with U.S. Ambassador to China Nicholas Burns on “U.S./China Relations.”

• G7 Summit. Hudson Institute discussion on “The G7 Summit and a New Era of Japanese Leadership.”

• Biden-Yoon summit. George Washington University Elliott School of International Affairs virtual Korea Policy Forum on “Assessing the Biden-Yoon Summit.”

• U.S. investment. Second day of the 2023 SelectUSA Investment Summit, including remarks from Commerce Secretary Gina Raimondo.

• Supreme Court ethics. Senate Judiciary Committee hearing on “Supreme Court Ethics Reform.”

• International conservation. Senate Appropriations State, Foreign Operations and Related Programs Subcommittee hearing on “Advancing Security and Prosperity Through International Conservation.”

• National flood insurance. Senate Banking, Housing and Urban Affairs Committee hearing on “Reauthorization of the National Flood Insurance Program: Improving Community Resilience.”

• Farm bill and social justice. American University briefing on Capitol Hill following its two-day summit on the next farm bill and racial justice to share research findings, analysis, and farmers' experiences with the Senate and select members of the public.

• Student loan forgiveness. Heritage Foundation discussion on “ Income-Driven Repayment Overhaul: The Backdoor Student Loan 'Forgiveness' the Media Isn't Talking About.”

• Coronation of King Charles III. The Atlantic virtual discussion on “The Big Story: King Charles III Coronation,” focusing on “the new era of the monarchy and its role both within the United Kingdom and on the international stage.”

• Infrastructure and cybersecurity. Intelligence and National Security Alliance virtual discussion on “Protecting Critical Infrastructure: The New National Cybersecurity Strategy.”

• The Indo-Pacific and Ukraine. Hudson Institute discussion with Czech Foreign Minister Jan Lipavsky on “The Indo-Pacific, Ukraine, and Transatlantic Ties.”

• Rural housing. Senate Banking, Housing and Urban Affairs Housing, Transportation, and Community Development Subcommittee hearing on “Rural Housing Legislation.”

Wednesday, May 3

• FY 2024 Budget: U.S. Army Corps of Engineers. Senate Environment and Public Works Committee hearing on “U.S. Army Corps of Engineers Budget 2024 and Implementation of Water Resources Development Act of 2022.” Assistant Army Secretary for Civil Works Michael Connor and US Army Corps of Engineers Chief Engineer Lt. General Scott Spellmon testify.

• FY 2024 Budget: DOE. Senate Appropriations Energy and Water Development Subcommittee hearing on “A Review of the FY 2024 Budget Request for the US Department of Energy, including the National Nuclear Security Administration.” Energy Secretary Jennifer Granholm testifies.

• China biodiversity. Wilson Center's China Environment Forum discussion on “China's Biodiversity Action at Home and Overseas.”

• Chip wars. Middle East Institute virtual discussion on “Chip War: The Fight for the World's Most Critical Technology.”

• Brainard remarks. Third day of 2023 SelectUSA Investment Summit with remarks from National Economic Council Director Lael Brainard.

• Fossil fuel costs. Senate Budget Committee hearing on “Who Pays the Price: The Real Cost of Fossil Fuels.”

• USAID. Brookings Institution discussion on “Understanding USAID's (US Agency for International Development) Policy Framework.”

• Global information. Senate Foreign Relations State Department and USAID Management, International Operations, and Bilateral International Development Subcommittee hearing on “The Global Information Wars: Is the USWinning or Losing?”

• U.S./Argentine relations. Inter-American Dialogue discussion on “U.S./Argentina Relations: Priorities and Opportunities.”

• U.S./Canada relations. Wilson Center's Canada Institute discussion on “Possibilities — Canada and the Biden Administration's Historic Bipartisan Economic Investments.”

Thursday, May 4

• Farm bill credit and risk management. Senate Agriculture Commodities, Risk Management and Trade Subcommittee hearing on “Commodity Programs, Credit, and Crop Insurance, Part 2: Industry Perspectives on Risk Management and Access to Credit.”

• Crop insurance reform. R Street Institute discussion on “Ripe for Reform: Federal Crop Insurance.”

• Cell-based agriculture. Center for Strategic and International Studies discussion on “The Future Appetite for Alternative Protein,” focusing on plant-based or cellular agriculture.

• Blinken, Granholm remarks. Final day of the 2023 SelectUSA Investment Summit including remarks from Energy Secretary Jennifer Granholm and Secretary of State Antony Blinken.

• U.S./China panel. U.S./China Economic and Security Review Commission hearing on “Rule by Law: China's Increasingly Global Legal Reach.”

• NATO and transatlantic security. Johns Hopkins University Paul H. Nitze School of Advanced International Studies virtual discussion on “NATO and the Evolving Transatlantic Security Agenda.”

• State visit by South Korea’s Yoon. Center for Strategic and International Studies virtual discussion on “Assessing President Yoon's State Visit.”

• FERC. Senate Energy and Natural Resources Committee hearing on the Federal Energy Regulatory Commission.

• Bank failures. Senate Banking, Housing and Urban Affairs Committee hearing on “Holding Executives Accountable After Recent Bank Failures.”

• U.S./Japan cooperation. Brookings Institution discussion on “Global diplomatic engagement: Prospects for U.S./Japan cooperation.”

• Russian war in Ukraine. The Hudson Institute holds a virtual discussion on “Reaching an Endgame in Ukraine.”

• Next public health emergency. Senate Health, Education, Labor and Pensions Committee hearing on “Preparing for the Next Public Health Emergency: Reauthorizing the Pandemic and All-Hazards Preparedness Act.”

Friday, May 5

• Federal Reserve. Fed Governor Lisa Cook delivers commencement remarks at Michigan State University.

• Carbon border adjustment mechanisms. Washington International Trade Association and the U.S. Council for International Business virtual discussion on “Finding Synergies on Carbon Border Adjustment Mechanisms.”

• Green tax credits. American Bar Association Tax Section 2023 May Tax Meeting including a discussion on “Getting Easier Being Green? EOs (Exempt Organizations) Seeking IRA (Inflation Reduction Act) Tax Credits.”

• Venezuela situation. Center for Strategic and International Studies discussion with Juan Guaido, Venezuelan opposition leader.

Economic Reports for the Week

Key financial reports are Wednesday’s FOMC decision, the Fed chair’s presser on Wednesday and Friday’s Employment report.

Monday, May 1

PMI Manufacturing
Construction Spending
Institute for Supply Management releases its Manufacturing Purchasing Managers’ Index for April. Consensus estimate is for a 46.7 reading, roughly even with the March data. The index has had five consecutive readings below 50, indicating contraction in the manufacturing sector.
Earnings: Arista Networks, MGM Resorts International, NXP Semiconductors, SBA Communications, Stryker, and Vertex Pharmaceuticals release earnings.

Tuesday, May 2

Motor Vehicle Sales
S&P CoreLogic Case-Shiller HPI
Factory Orders
Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey (JOLTS). Economists forecast 9.5 million job openings on the last business day of March, 431,300 fewer than in February.
Earnings: Advanced Micro Devices, Cummins, DuPont, Eaton, Ecolab, Ford Motor, Marathon Petroleum, Marriott International, Pfizer, Simon Property Group, Starbucks, and Uber Technologies report quarterly results.

Wednesday, May 3

MBA Mortgage Applications
ADP releases its National Employment Report for April. Expectations are for the economy to add 135,000 private-sector jobs, 10,000 fewer than in March.
PMI Composite Final
The ISM releases its Services PMI for April. The consensus call is for a 51.8 reading, slightly higher than the March figure. The services sector continues to hold up better than the manufacturing sector with only one reading below the expansionary level of 50 since May of 2020.
FOMC meeting conclusion: The Federal Open Market Committee (FOMC) announces its monetary-policy decision. There is an 85% chance the FOMC raises the federal-funds rate by 25 basis points, to 5%-5.25%, per the CME FedWatch Tool.
Fed chair press conference
Earnings: Corteva, CVS Health, Emerson Electric, Equinix, Estée Lauder, Kraft Heinz, Phillips 66, Public Storage, Qualcomm, and Yum! Brands release earnings.

Thursday, May 4

Jobless Claims
International Trade
Productivity and Costs
Fed Balance Sheet
Money Supply
European Central Bank announces its monetary-policy decision. The ECB is widely expected to raise its key interest rate by a quarter of a percentage point, to 3.25%. Traders are pricing in two more 25 basis-point-hikes after this meeting as the euro zone’s inflation has proved to be more stubborn than in the U.S.
Earnings: Anheuser-Busch InBev, Apple, Becton Dickinson, Booking Holdings, ConocoPhillips, Expedia Group, Fortinet, Intercontinental Exchange, Kellogg, Moderna, Regeneron Pharmaceuticals, Sempra Energy, Shopify, and Zoetis hold conference calls to discuss quarterly results.

Friday, May 5

Employment: BLS releases the jobs report for April. Economists forecast an increase of 185,000 in nonfarm payrolls, following a 236,000 gain in March. The unemployment rate is expected to tick up from 3.5% to 3.6%.
Consumer Credit
Earnings: CBOE Global Markets, Cigna, Dominion Energy, Johnson Controls International, and Warner Bros. Discovery release earnings.

Key USDA & international Ag & Energy Reports and Events

USDA’s Crop Progress and the weather outlook ahead are two key focus points this week to determine the planting pace and crop development.

Monday, May 1

Ag reports and events:

Export Inspections
Crop Progress
Annual milk production and factors affecting supply
Commodity Costs and Returns
Milk Cost of Production Estimates
Cotton System Consumption and Stocks
Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks
Flour Milling
Flour Milling, Annual
Grain Crushings and Co-Products Production