Key Events and Data to Watch This Weekis week

As global markets head into a holiday-shortened trading week in the U.S., several key developments are set to shape investor sentiment. The focus will be on the ongoing debate in the Senate regarding President Donald Trump’s signature tax-and-spending bill, crucial job market data due on Thursday, and Tesla’s upcoming second-quarter delivery report. Additionally, discussions surrounding the ongoing Israel-Iran conflict, the global economic outlook, and potential U.S. trade deals will influence financial markets.

1. Senate’s Tax-and-Spending Bill in Focus

The Republican-led U.S. Senate is set to continue debating the massive “One Big Beautiful Bill Act,” a tax-and-spending measure supported by President Trump. Despite opposition within the GOP and strong Democratic resistance, the Senate is expected to vote on the bill soon, with some analysts predicting passage as early as Monday.

The proposed bill, which has a projected cost of $3.3 trillion over the next decade, aims to extend tax cuts put in place during Trump’s first term, cut taxes further, and increase defense and border security spending. While the bill’s passage through the Senate is widely anticipated, it still faces significant hurdles in the House of Representatives.

The bill’s fiscal implications have raised concerns, especially regarding the long-term impact on the U.S. deficit. Analysts from ING suggest that worries over the fiscal consequences may be contributing to recent weakness in the U.S. dollar.

2. Nonfarm Payrolls: Job Market Data and Economic Growth

Markets will be closely monitoring the U.S. Department of Labor’s monthly nonfarm payrolls report for June, which is due on Thursday. Economists expect the U.S. economy to have added 120,000 jobs in June, down from 139,000 in May. This marks a potential slowdown in job growth, but still indicates a stable labor market.

The Federal Reserve has taken a cautious approach to interest rate policy, with inflationary pressures remaining subdued despite the ongoing tariff conflicts. Federal Reserve Chair Jerome Powell emphasized that rate cuts will depend on further clarity regarding the effects of tariffs on the U.S. economy.

In addition to the job report, the Institute of Supply Management’s manufacturing and services sector activity data, to be released later in the week, will provide further insights into economic conditions.

3. China’s Manufacturing Sector: Signs of Stabilization

China’s manufacturing sector showed signs of stabilization in June, with the country’s purchasing managers index (PMI) rising to 49.7, slightly above expectations of 49.6 and up from May’s 49.5. Despite remaining in contraction territory (a reading below 50 indicates contraction), the slight improvement suggests a recovery in domestic conditions, possibly fueled by the recent U.S.-China trade tariff reductions.

Manufacturing in China has been under pressure due to weaker external demand amid the trade war, but improved trade relations between the U.S. and China, along with easing tariffs, could benefit Chinese manufacturers and support future growth.

4. Tesla’s Second-Quarter Deliveries: Market Reactions and Expectations

Tesla (NASDAQ:TSLA), the world’s leading electric vehicle maker, is expected to release its second-quarter delivery numbers on Wednesday. Analysts are forecasting a significant slowdown in sales, with expected deliveries of around 390,000 vehicles, down from 443,956 in the same period last year.

This dip in sales follows a weaker-than-expected first-quarter performance, with Tesla struggling in the U.S. and European markets due to declining demand. The company’s market performance has also been impacted by CEO Elon Musk’s increasingly divisive political stances, especially his association with President Trump. Tesla’s stock has fallen by more than 14% this year, and its second-quarter report will be a key indicator of its ability to recover in a competitive and increasingly tough market.

5. Top Central Bankers to Meet in Sintra: Global Economic Outlook

In Portugal, central bankers from around the world are convening in Sintra for the annual conference. The meeting comes at a crucial time, as global economic concerns around trade tensions, geopolitical instability, and inflation remain in focus.

Federal Reserve Chair Jerome Powell, along with ECB President Christine Lagarde and central bank governors from Japan, South Korea, and the U.K., will engage in discussions on monetary policy and economic growth. The gathering will also likely address the future role of the U.S. dollar as the world’s reserve currency, given Trump’s critical stance towards international institutions and his push for protectionist policies.

Powell, in particular, will be under scrutiny, especially after President Trump’s continued calls for aggressive interest rate cuts. The ongoing debate over the Fed’s independence, and Trump’s influence over its direction, could have broader implications for the dollar’s standing in global markets. Investors will closely watch Powell’s comments for further clues on the central bank’s policy direction.

A Week of Key Economic Events and Market Risks

This week is poised to be a critical one for financial markets. The debate over Trump’s tax-and-spending bill, crucial U.S. labor market data, and Tesla’s quarterly deliveries will keep traders on edge. At the same time, global trade tensions, the ongoing discussions in Sintra, and evolving geopolitical dynamics will continue to shape market sentiment.

As the U.S. approaches a potential July 9 tariff deadline, trade deals, fiscal policy, and monetary decisions will all play a role in determining market direction. Investors will need to navigate these complex developments as they assess potential risks and opportunities in the coming weeks.