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Just over four months into a year marked by a historic bond market sell-off, surging inflation, global geopolitical stresses and equity markets near bear-market territory, investors are likely to welcome the approach of the so-called “summer doldrums.” The summer months are traditionally quiet periods in the financial markets, with lower volatility and trading volumes. While volatility is unlikely to decline materially given the uncertain economic growth and inflation outlook, the recent decline in inflation expectations may be a preliminary sign that Federal Reserve tightening is already helping to ease inflation pressures.
This week’s economic calendar will provide more data on the state of the U.S. consumer, with retail sales out Tuesday. Additionally, housing starts data being issued on Wednesday and existing home sales statistics on Thursday should offer an indication of whether the recent spike in mortgage rates is beginning to dent the housing market.
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