Busy Business Week Ahead Following Holiday Weekend

Tuesday begins a very busy week following Monday's Memorial Day holiday, opening with personal income and outlays where both are expected to show strength unlike the PCE core inflation index which is expected to remain little changed. Home prices are an increasing positive for the economy but signals from Case-Shiller data, also on Tuesday, are expected to be mixed. ADP's payroll estimate will be posted on Wednesday morning and though forecasters don't put much stock in the report, ADP has been performing much more accurately than most forecasters so far this year. Wednesday will also see the ISM manufacturing report where new orders are always the highlight and also construction spending where gains have been at the very top of the economy. The Beige Book will be posted Wednesday afternoon and will likely offer upgrades for consumer spending and housing in what may raise talk of a June FOMC rate hike. But such talk will depend entirely on Friday's employment report where forecasters are calling for only a 158,000 nonfarm payroll gain, one that, if not accompanied by acceleration in average hourly earnings, could push out rate-hike expectations to the July FOMC.