In June, the federal budget deficit was $864 billion — larger than the entire budget deficit for all of 2017 or 2018.
To put a finer point on it, the federal budget deficit in June 2019 was just $8 billion.
On Wednesday, the Congressional Budget Office (CBO) is scheduled to release the status of the federal budget for the month of July — as the coronavirus started to hit another peak.
While the budget deficit doesn’t have a direct correlation to the stock market, investors are certain to take note of the fiscal shape of the federal government.
The massive increase in the deficit has a lot to do with the $2.2 trillion CARES Act, which provided monetary relief for businesses and individuals from the impacts of the coronavirus.
According to the latest 10-year projections from the CBO, the U.S. economy won’t likely recover from coronavirus spending for more than a decade.
Wall Street will be keeping a close eye on how much wider the deficit grew in July.
Money & Markets Week Ahead: Consumer Price Spotlight
Another key data point releasing this week will be the Consumer Price Index (CPI).
This is the measure of the average change in prices paid by consumers for various goods and services.
In June, the CPI rose 0.6%, indicating the cost for most goods and services rose as millions of Americans remain unemployed due to coronavirus layoffs and furloughs.
The biggest increase in costs came in food, which rose 4.5% in June. That was offset by a 12.6% drop in energy prices — mostly attributed to lower oil prices.
However, oil has started to rebound, meaning fuel prices are likely to go up.
IBEX IPO
Customer management company IBEX Holdings Ltd. is expected to price its initial public offering (IPO) this week.
The Bermuda-based company has filed to raise $100 million by selling 4.8 million shares of common stock. The price range currently is between $20 and $22 per share.
While it’s not a huge IPO, the company has posted solid increases in revenue, gross profit and operational profit.
Its revenue for the nine months ending March 31, 2020 was 8.5% higher than the same time a year ago. IBEX’s gross profit jumped 9%, and its operating profit was up 6.7%.
If the IPO is successful, the enterprise value of the IPO would be around $390 million.
Money & Markets Week Ahead: The Data Dump
This week’s data dump includes a full range of jobless claims.
In June, the Bureau of Labor Statistics said nonfarm employment rose by 4.8 billion, but the unemployment rate dropped to 11.1%.
Nearly 18 million Americans remain unemployed and face the struggle of a $600-per-week jobless claim benefit going away at the end of July.
The jobless claims figures will be released on Thursday morning.
On Friday, investors will get a look at retail sales in July.
In June, sales were up 7.5%, but a second round of lockdowns last month could see that figure recede.
Earnings Reports
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out next week:
Canopy Growth Corp. (NYSE: CGC) — Monday, before the market opens.
Marriott International Inc. (Nasdaq: MAR) — Monday, before the market opens.
Royal Caribbean Cruises Ltd. (NYSE: RCL) — Monday, before the market opens.
Nautilus Inc. (NYSE: NLS) — Monday, after the market closes.
Occidental Petroleum Corp. (NYSE: OXY) — Monday, after the market closes.
T2 Biosystems Inc. (Nasdaq: TTOO) — Tuesday, after the market closes.
Cisco Systems Inc. (Nasdaq: CSCO) — Wednesday, after the market closes.
Lyft Inc. (Nasdaq: LYFT) — Wednesday, after the market closes.
Draftkings Inc. (Nasdaq: DKNG) — Friday, before the market opens.