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The upcoming week promises to be busy in the stock market, with significant data due for release, ranging from ISM manufacturing figures to the BLS job report. The PCE data, disclosed last Friday, suggests the Federal Reserve still has substantial work ahead, nudging the likelihood of a rate hike back to 60% for June and almost a 100% chance by July. Additionally, any prospects of rate cuts have been removed for 2023.

The Jobs data on Friday is anticipated to reveal an uptick in the unemployment rate to 3.5% from 3.4% last month and a drop in job creation figures to 190,000 in May, down from 230,000. Meanwhile, average hourly earnings are predicted to have risen by 4.4%, maintaining pace with the previous month. If these figures meet or exceed estimates, it seems probable that more rate hikes will be factored into future forecasts.

For weeks, I have been emphasizing that the trajectory for interest rates is higher for a longer duration. This forecast and thought process seem to be unfolding as expected, with rates experiencing a steep increase in recent weeks. Much of the escalation is noticeable at the longer end of the yield curve, with the 30-year nominal rate now at 3.95% and on the verge of exceeding the 4% threshold once more, which may lead to an advance approaching its October peak.

While the economy may be heading into a recession someday, that day is not here yet. We continue to be in this slowing growth, high inflation environment, which means the pressure will remain on the Fed to keep rates higher.

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