The Fed will meet on June 15-16 to send a signal to raise interest rates by watching whether it believes inflation is higher than expected. Fed officials stressed that they will maintain a loose policy to watch for signs of a real economic recovery. They also argue that the higher inflation figures are temporary because they are compared to last year's weak period. For markets, the key is whether the Fed is starting to believe that inflation is higher than expected, or whether the US economy is strong enough to make progress without so much monetary support. Fed officials have said that if they see signs of improvement, they will consider scaling back its quantitative easing bond-buying program, which would be the first step in raising interest rates until at least 2023.

If inflation is too high, the Fed's main weapon is to raise interest rates. The prospect of raising interest rates has unnerved the stock market because it will mean higher corporate costs and reduced liquidity. In theory, higher interest rates also mean that investors may choose bonds with higher yields rather than stocks.

Julian Emanuel, head of equity and derivatives strategy at BTIG, says he has studied what happens to the stock market when core personal consumption spending is above the Fed's 2 per cent target. "since 1989, the average monthly return for months with core personal consumption spending exceeding 2 per cent has been 1.6 per cent, with a clear preference for more defensive industries such as health care and a clear bias towards the underperformance of all types of technology stocks," he said. "

As measured by s & p information technology stocks, technology stocks are up 1.6 per cent over the past month and 5.9 per cent so far this year. The sector's gains lagged behind the 12 per cent rise in the S & P 500. So far this year, the best-performing sectors have been cyclical, with energy stocks up 36.2 per cent, financials up 28.5 per cent, materials stocks up 20.1 per cent and industrials up 18.3 per cent. Communications services, including some Internet growth names, have risen 16% since the start of the year. Health care has consistently outperformed information technology, growing by 8.6% so far this year.

George Goncalves, head of US market macro strategy at MUFG, believes that if the May non-farm payrolls data is still lower than estimated, the market is bound to take a big hit; if the data are better than estimates, the market will reignite optimism about the economic outlook and the stock market will benefit.’

On Monday, May 31, China's official manufacturing PMI, Germany May CPI annual rate initial; OECD Secretary General Gurria and Chief Economist Mann jointly released the OECD economic outlook; European Central Bank governing Council Visco delivered a speech.

On Tuesday, June 1st, Australia's first quarter current account, China May Caixin Manufacturing PMI, Euro Zone multinational and US May Markit Manufacturing PMI, Canada March quarterly adjustment GDP, RBA announced interest rate resolution; the 17th OPEC and non-OPEC ministerial videoconference was held; after the OECD ministerial meeting, the new OECD Secretary General Coleman and US officials held a joint press conference.

On Wednesday, June 2, Australia first quarter GDP, April Bank of England Mortgage permit.

On Thursday, June 3, Australia's April goods and services trade account, Australia's April monthly import and export rate, China May Caixin Services PMI, May ADP employment in the United States, the United States initial jobless benefits claims in the week ended May 29, the United States renewed jobless benefits claims in the week ended May 22; the Federal Reserve released the beige book on the state of the economy; Philadelphia Fed Chairman Huck delivered a speech on the economic outlook. Chicago Federal Reserve Chairman Evans spoke on the current economic situation and monetary policy.

Friday, June 4, Euro area April retail sales, US May non-farm payrolls movement, US May unemployment rate, US May average hourly wage rate, US April final value of durable goods orders monthly rate, US April factory order monthly rate (%); Philadelphia Federal Reserve Chairman Huck spoke. G7 finance ministers will meet at Lancaster Palace in London from June 4 to 5, followed by a summit of G7 leaders.

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