May 3 FOMC Minutes Released Today

STOCK INDEX FUTURES

Stock index futures are lower due to a lack of progress in the U.S. debt ceiling talks.

Mortgage applications in the U.S. declined 4.6% in the week ended May 19, following a 5.7% drop in the previous week, according to data from the Mortgage Bankers Association. Applications to refinance a home loan fell 5.4% and those to buy a home were down 4.3%.

The minutes from the May 3 Federal Open Market Committee meeting will be released at 1:00 central time. The FOMC minutes will be scrutinized for further clues on the Fed’s next move.

federal reserve

CURRENCY FUTURES

The Ifo Business Climate indicator for Germany dropped by 1.7 points from a month earlier to 91.7 in May 2023, which is down from the previous month’s 14-month high and falling below market expectations of 93.0. This marked the first monthly decline in the index since last October.

The latest U.K. consumer price index report raised expectations of further policy tightening by the Bank of England. The April CPI report revealed a decline in the inflation rate to 8.7%. However, the rate remained significantly higher than both the market predictions of 8.2% and the Bank of England’s target rate of 2.0%.

Soon after the report was released money markets priced in a peak BOE interest rate as high as 5.50%, suggesting a full percentage point of increases through the end of 2023.

Business sentiment at big Japanese manufacturers turned positive for the first time this year and service-sector morale improved to a five-month high.

 INTEREST RATE MARKET FUTURES

Futures are lower as several Fed officials raised expectations for prolonged higher interest rates, after hawkish comments from Federal Reserve officials Jim Bullard and Neel Kashkari.

Christopher Waller of the Federal Reserve will speak at 11:10.

The Treasury will auction 5-year notes today.

Financial futures markets are predicting there is a 68% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its June 14 policy meeting, and there is an 32% chance of a 25 basis point increase.

 

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