Diary: Nothing to fear but fear itself

After the excitement of the last couple of weeks, who needs another frenetic five days?

Well, here we go again, with Federal Reserve Chair Jerome Powell back in the hot seat this week as he returns to testify before both houses of US Congress on Thursday and Friday.

The minutes of the Reserve Bank’s June meeting are out tomorrow and will be examined closely to see the justification of the surprise 0.50% rise in the cash rate.

Budgets are due in NSW and Queensland this week.

While the Fed Chair said on Wednesday that he and his committee members were “absolutely determined” to keep inflation expectations from rising, that will be tested in his two sessions on Capitol Hill.

On Friday, the central bank said in a report to Congress on Friday ahead of the hearings that its commitment to price stability is “unconditional” – which will also be questioned, especially by Republicans looking for cheap points.

Inflation, not growth or employment has risen to be a top political issue, as well as an economic one.

This week will see that change confirmed and the Fed’s raised forecast for rising inflation, lower GDP and higher unemployment come under intense questioning in Congress.

Markets will take a back seat to the Fed chair’s two sessions before Congress but will be pouring over transcripts of the hearings to see if there is any deviation from the new hawkishness.

Data releases in the US are light on this week.

There’s new housing data which is expected to show the market continues to cool. Existing-home sales likely fell again in May. There’s also new-home sales for May, which may rise.

Other key data include the University of Michigan consumer confidence survey. This measure, which is sensitive to fluctuations in household finances, has been implying that consumers are not happy with their lot at present.

US retail gasoline prices have risen sharply and have many consumers perceiving that their financial situations have worsened.

Business conditions surveys will be issued on Thursday for the US, Europe, Japan and Australia and the AMP’s chief economist, Shane Oliver says “will provide a guide as to how much global monetary tightening and supply constraints are impacting the growth outlook and price and cost components will be watched for further evidence of peaking.”