[Weekly Outlook] Nvidia (NVDA.O) to Set Another Earnings Record? All Eyes on FOMC Meetings, PCE Data, and U.S. Q1 GDP

TradingKey - The market is concerned that  the U.S. President Trump may once again wield the tariffs, leading to a halt in the nearly one-and-a-half-month rise of U.S. stocks. The Federal Reserve released the minutes from the May monetary policy meeting, providing clues about the future direction of interest rate policy. This Friday, the U.S. will announce the month-on-month and year-on-year Core PCE Price Index for April. Bank of Japan Governor Kazuo Ueda is set to deliver a speech on Tuesday, and the market will closely monitor any commentary regarding potential interest rate hikes. Nvidia (NVDA.O)'s earnings report will be the focus on Wall Street this week, with an LSEG survey indicating that analysts expect Nvidia's Q1 revenue to be $43.2 billion, with profits potentially surging by about 45%. Other key participants in the AI industry chain, such as Seagate, HP (HPQ.N), and Dell (DELL.N), will also release their earnings reports. Chinese concept stocks will also see earnings reports from Pinduoduo and Xiaomi.

Major Event Preview

The Federal Reserve will release the minutes of the May monetary policy meeting this Thursday.

At the monetary policy meeting on May 7, the Federal Reserve decided to keep the policy interest rate unchanged at 4.25% to 4.50%, marking the third consecutive meeting this year where there was no change. In the statement issued afterwards, the Fed noted that "the uncertainty surrounding the economic outlook has increased further," explicitly mentioning rising risks associated with high unemployment and high inflation. The minutes from the meeting will provide detailed insights into the FOMC's views on monetary policy and offer clues about future interest rate directions.

Economists generally believe that tariffs had little impact on the April price data, but the effects of trade policy are expected to become more apparent as early as next month. With the employment market showing no significant signs of pressure, Fed officials are inclined to maintain stable interest rates until changes in trade policy are reflected in the data. The meeting minutes are likely to continue to reinforce this view.

Bank of Japan Governor's Speech and Long-Term Bond Auction Under Scrutiny

On Tuesday (May 27), Bank of Japan Governor Kazuo Ueda will deliver an opening address at a conference hosted by the central bank on "New Challenges in Monetary Policy." At the May rate meeting, the Bank of Japan maintained its interest rate level for the second consecutive time. Ueda stated that the uncertainty brought about by trade policy has significantly increased and that current real interest rates are notably low. Should the economic outlook materialize, the Bank will continue to raise interest rates, with the timing of the next rate hike largely depending on the impact of tariffs on the economy.

Recently, concerns over the U.S. fiscal deficit have pressured the global bond market, leading to a continued rise in Japanese long-term bond yields. The yield on 40-year government bonds has reached new highs, and the Japanese Ministry of Finance's recent auction of 20-year government bonds yielded disastrous results, with a bid-to-cover ratio of only 2.5 times, far lower than last month's 2.96 times, marking the lowest level since 2012.

U.S. Inflation Data Clouds Interest Rate Path

This Friday, the first U.S. Personal Consumption Expenditures (PCE) inflation and consumption data will be released since Trump's "Liberation Day." The core PCE is the Federal Reserve's preferred inflation indicator, which dropped significantly in March, falling from 3.0% to 2.6% year-on-year. According to the Cleveland Fed's Nowcast model, the year-on-year growth rate of the core PCE for April is expected to remain unchanged, but the overall PCE is anticipated to slightly slow to 2.2%.

In the absence of changes in the core inflation rate, it is difficult to see the Fed shifting to a more decisive course of action regarding interest rates. In fact, most of the inflationary pressure from tariffs will take time to be reflected in the data, so it may take a few months to determine the impact of Trump's tariffs on price growth.

AI Leader Nvidia (NVDA.US) to Release Quarterly Earnings

Nvidia (NVDA.US) will announce its quarterly earnings after the market closes on Wednesday. Investors will closely monitor demand trends from this leading AI chip supplier. According to consensus data from Bloomberg analysts, Nvidia is expected to report an adjusted earnings per share (EPS) of 0.88 and revenue of 43.3 billion for the quarter. In the same period last year, the company reported an adjusted EPS of 0.61and revenue 0.61 and revenue of 26 billion.

Nvidia had previously warned that due to new regulations, it expects to incur costs of up to $5.5 billion for the quarter ending in April. This one-time expense is expected to lower its gross margin from the company's original forecast of 71% to about 58%. Nvidia CEO Jensen Huang described the ban as "very painful," stating that the company has had to forgo a significant amount of sales and tax revenue as a result.

Selected Economic Data

Tuesday: U.S. Durable Goods Orders MoM for April

Thursday: Revised Annualized Quarterly Real GDP for the First Quarter in the U.S.

Friday: U.S. Core PCE Price Index YoY for April

Selected Events This Week

Monday: U.S. President Trump is scheduled to give a speech. European Central Bank President Christine Lagarde will also speak.

Tuesday: Bank of Japan Governor Kazuo Ueda is set to deliver a speech.

Thursday: The Federal Reserve will release the minutes from the May monetary policy meeting. Bank of England Governor Andrew Bailey will also speak.

Company Earnings Reports

Monday: Meituan (03690.HK)

Tuesday: Xiaomi Group (01810.HK), Pinduoduo (PDD.O)

Wednesday: Nvidia (NVDA.O), Salesforce (CRM.N), HP (HPQ.N), C3.ai (AI.N)

Thursday: Dell (DELL.N), Costco (COST.O), Marvell Technology (MRVL.O), Futu Holdings (FUTU.O)

Friday: Tiger Brokers (TIGR.O)