The economic week ahead will be calm, with the S&P PMI readings expected to be the main market drivers. We anticipate the Federal Reserve will take a cautious approach in their speeches. Markets are also watching for trade deals from the US and the House Republicans’ efforts to pass Trump’s budget. Since next Monday is a holiday, Friday afternoon is likely to be quiet. Key events kick off on Monday, May 19, with several Federal Reserve speakers scheduled throughout the day.

Key Events Early In The Week

On Tuesday, May 20, the Philadelphia Fed will release its non-manufacturing index, and more Fed discussions are planned. Wednesday, May 21, will see a $16 billion auction of 20-year US Treasuries, accompanied by statements from several Fed members. Thursday, May 22, will be data-heavy. Initial jobless claims are expected to be around 226,000, down slightly from 229,000. The Chicago Fed national activity index and the S&P flash PMIs are also on the agenda. We expect a month-over-month increase of 3.2% in existing-home sales for April. On Friday, May 23, new-home sales figures will be announced. The forecasted seasonally adjusted annual rate is 705,000, reflecting a 2.6% increase following a 4.0% decrease.

Market Trends And Influences

The market is currently cautious. With fewer data releases and upcoming holidays, attention shifts to qualitative signals over numerical data. The next few days will be influenced by communications from the Federal Reserve, which are expected to stay steady but could attract notice due to a lack of major headlines. Any comments will be carefully analyzed for changes in tone. Political discussions surrounding budget policy and trade add complexity, but they aren’t the main focus right now. We’re looking at long-term impacts instead of immediate market flows. Unless comments become sharply critical, little will likely change in pricing. For us, Monday is the real start of the week, especially with the impending holiday. Statements from central bank officials may create more unpredictability than usual. Traders might not expect strong positioning before the weekend since liquidity is likely to drop, but the timing favors small adjustments instead of larger reconfigurations. Tuesday’s Philly Fed non-manufacturing index arrives during what could be a slow period for macro indicators. Its significance lies more in how it reflects local business activity than in any changes from previous readings. This index doesn’t usually sway broader sentiment alone, but its context becomes important in quieter weeks. Midweek auctions, like Wednesday’s 20-year Treasury issue, can impact long-term rates but have less influence on equity or credit markets. Still, if yields settle after this supply, they can affect risk appetite or caution based on market views. We need to pay attention to how the speeches that day show the Fed’s unity, especially regarding inflation and the labor market. Differences in opinions could have more weight than usual. Thursday is packed with events. The jobless claims figure is less about the number than its trend. A steady figure or a dip from 229,000 would calm nerves, while a rise towards 240,000 in upcoming weeks might raise concerns about the economy’s strength. However, we aren’t on that track yet. The flash PMIs usually generate noise but may gain importance this week. A clear reading showing either expansion or contraction could shift the market’s current balance. The housing data—existing-home and new-home sales—could be more telling about consumer attitudes and financial conditions than usual. A 3.2% increase would suggest that rate-sensitive parts of the economy are adapting rather than failing. However, the previous month’s steep drop means that any recovery will be seen as limited and likely driven by temporary factors rather than long-term demand. With events spread out and predictable speech content, prices are likely to remain within recent ranges. Market reactions will depend mostly on surprises, not just the release of data or remarks. As volatility concentrates at specific times, traders should stay flexible and avoid excessive exposure to expected statements or numbers. Reducing risk during midday periods and not pushing narratives in flat sessions is the best strategy moving forward. Create your live VT Markets account and start trading now.

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