By Theresa Sheehan

PRINCETON (SMRA) – The week ahead has a light data calendar, with
little to distract from the upcoming meeting of the Federal Open Market
Committee Tuesday and Wednesday.

Among the economic data, it will be that related to the housing
market that should likely have the most impact.

The FOMC meets on June 21 and 22. The post-meeting statement is
expected at 12:30 ET Wednesday, to be followed by the update to the
Fed’s economic forecast at 14:15 ET and Chairman Bernanke’s news
conference.

No change in monetary policy is expected. The economic data
reflects heightened uncertainties about the sustainability of the
two-year old recovery, and whether less subdued inflation is rising to
quickly.

In advance of the FOMC meeting, the Board of Governors should meet
around midday on Monday to consider the discount rate. It is unlikely
any change will be made at this time. If it does, it is more probable
that an announcement would be coordinated with the FOMC meeting
statement.

No other major central banks have meetings scheduled until the
first week of July.

The sparse schedule of data releases will have few highlights. The
most likely to engage market attention are those associated with the
housing market.

Data on May sales of existing homes is scheduled at 10:00 ET
Tuesday, and those for new single-family houses is at 10:00 ET Thursday.
Sales activity has been sluggish over the course of the spring, and May
should be of a piece with the prior few months. In spite of low mortgage
rates, consumers remain reluctant to enter the housing market as home
values decline. Sales of existing homes are outpacing those for new
homes due to plentiful supplies of bargain-priced distressed properties.

The FHFA House Price Index for April will be released at 10:00 ET
Wednesday. It should confirm the overall declines in prices for existing
properties. Although declines have been less steep than during the
depths of the housing correction, the renewed fall in prices has raised
uncertainties about the outlook for residential real estate.

The Richmond Fed’s Survey of Manufacturing for June at 10:00 ET
Tuesday comes on the heels of soft reports from the New York and
Philadelphia Districts. Last month the Richmond report’s general
activity index slipped back into a contractionary reading for the first
time since September 2010. The Richmond number tends to lead the other
District Bank outlooks. If it turns higher, it may be consistent with
temporary conditions that led to a brief slowdown in manufacturing. If
it holds in negative territory, it will raise the possibility that the
current slowdown will be more sustained.

The advance report on durable goods orders for May Friday morning
should look a bit stronger than the 3.6% decline in April. Last month
the transportation component was quite soft after declines in civilian
aircraft orders. Aircraft orders advanced modestly in May, and should
support overall orders. Nonetheless, there may be other disruptions from
the supply chain or weather impacts that will restrain orders.

The release of the third estimate of first quarter GDP at 8:30 ET
Friday will probably be a non-event. At this point the second quarter is
well advanced, and any revisions to the first quarter are likely to be
small.

Initial claims for the week-ended June 18 at 8:30 ET Thursday will
be for the survey comparison week to May, and levels of new filings are
likely to be lower than the 414,000 level in the May 14 week. The
general trend for new and continuing claims is working its way down as
underlying conditions in the labor market continue to mend, if at a
sluggish pace.

The numbers for mass layoff activity in May mid-morning Wednesday
will probably be consistent with recent months. While private businesses
continue to try to avoid laying off skilled workers, state and local
governments are being forced to cut payrolls to close budget gaps.
Education and education-related workers are particularly vulnerable to
be laid off at this time of year.

The U.S. Treasury will auction a reopening of the 30-year TIPS
bonds Thursday, to settle on June 30. Also Thursday, Treasury will
announce new 2-, 5-, and 7-year notes, to auction the subsequent Monday,
Tuesday and Wednesday, respectively. These will also settle on June 30.

The Treasury is currently using extraordinary measures to keep the
debt from breaching the statutory limit. This may have an impact on the
announced sizes of the offerings of bills and/or coupons in the coming
weeks.

** Stone & McCarthy Research Associates **

[TOPICS: M$$FI$,M$U$$$,MAUDS$]