This week will be light on data releases, but heavy on Federal Reserve insights that could shape market expectations for the remainder of 2025.
Fed Minutes Take Center Stage
A couple of Fed president speeches and more importantly the minutes of the Fed's Federal Open Market Committee meeting will likely steal the show. Expect to see highlights of the current discussion: weighing the risk of higher tariff-induced inflation versus a slowing labor market that is beginning to show serious cracks.
After the June meeting, the FOMC updated its expectations for economic growth and inflation in its Summary of Economic Projections (SEP). The median projection for the unemployment rate in 2025 was revised higher to 4.5% from 4.4%. However, inflation was also revised up to 3% from 2.7% in the previous SEP. All signs point to rising stagflation concerns among the FOMC.
Key Data Releases to Watch
1. The June NFIB Optimism Index
In May, business optimism recovered slightly on improving sales expectations. After the big tariff scare in April, the subsequent pullback by the administration coupled with an array of tax cuts in the tax bill helped improve business sentiment. So long as tax policy is expansionary and supports consumers, sales volumes should increase along with businesses' ability to pass on any tariff costs to consumers.
2. Consumer Credit Report
Consumer credit is expected to show a slowdown. In April, consumer credit increased at a seasonally adjusted annual rate of 4.3%. Given the mounting pressures on consumer finances from student loan delinquencies and tightening credit access, any deceleration in credit growth would signal further headwinds for consumer spending.
