The coming week will be light on numbers but long on anxiety about the rallies in the dollar and Treasury prices.
Friday's disappointing May jobs number still will be fresh in traders' minds next week. That's because the light economic calendar means they won't have much new data to replace it.
Of the few economic releases scheduled for next week, traders say the biggest market-movers won't come till Friday. That's when we'll see import and export prices for May, Treasury budget numbers and the April trade balance. Economists are looking for the trade deficit to widen to $58.5 billion in April from $55 billion in March.
Paul Mendelsohn, strategist at Windham Financial, says he will be focusing on the U.S. Treasury auctions next Wednesday and Thursday to gauge foreign demand after the recent rally in prices. The yield on the benchmark, which moves inversely to price, dropped below the psychologically important 4% mark last week on news of slower job growth and a belief that the
may be close to finishing its series of rate hikes.
Mendelsohn attributes the recent run-up in demand for U.S. Treasuries to the strengthening dollar, which is up 9% vs. the euro this year as Europe's prospects grow messier.
"If you believe that the U.S. dollar is going to rise, then you want to be holding U.S.-denominated investments like Treasuries," says Mendelsohn. "And the eurozone is literally disintegrating after the French and Dutch votes against the EU charter. That puts the long-term viability of the euro currency in question, which is good for the dollar."
Treasury yields may be dropping, but the price of oil has risen back to the mid-$50 range. Analysts say the rally in oil prices heightens the importance of Thursday's meeting between EU officials and OPEC ministers. The expectation is that the EU reps will be pressing the oil cartel to increase output for some price relief as they are being squeezed not only by higher oil prices, but by a falling euro -- a double whammy when oil is priced in dollars.
Next week also will be light in terms of corporate earnings releases.
Investors will hear on Monday from a handful of companies, including
Bob Evans Farms
Jos. A. Bank Clothiers
Internet telephony provider
( NTOP) also will be reporting quarterly results on Monday. Analysts expect the company to lose 9 cents a share, wider than last year's loss of 4 cents, on revenue of $21.4 million.
Among the companies reporting earnings on Tuesday are
Dave & Buster's
( DAB) and
Toys R Us
will get off the couch on Tuesday to report earnings as well. The consensus earnings estimate for the company's fiscal second quarter is 31 cents, down from 44 cents a year ago, on sales of $554 million.
Traders will hear from
on Wednesday. Consensus estimate is for the tax preparation company to earn $3.53 a share, up from $3.23 last year, on $2.3 billion in sales.
Companies stepping into the earnings spotlight on Thursday include
also will report earnings on Thursday. Analysts expect the company to earn 22 cents, down from 32 cents last year, on revenue of $465 million.
And just in time for Friday's trip to the Hamptons,
Polo Ralph Lauren
reports quarterly earnings. Consensus estimate for the retailer is 80 cents, up a penny from last year, on $859 million in sales.