Much Anticipated FOMC Announcement Today

STOCK INDEX FUTURES

Mortgage applications increased 6.6% in the week ended June 10, the first increase in five weeks, but were 52.7% lower than a year earlier.

Retail sales in May declined 0.3% when a 0.1% increase was expected.

The June Empire State manufacturing index was negative 1.2 when 5.5 was anticipated.

There are three 9:00 central time reports. The June housing market index is predicted to be 68. The April business inventories report is estimated to show a 1.3% increase and the June Atlanta Federal Reserve business inflation expectations report, which last month was 3.7%.

The Federal Open Market Committee will release its policy statement at 1:00 p.m. central time and will be followed by a press conference with Fed Chair Jerome Powell at 1:30.  The Fed will also release its latest summary of economic projections, offering officials’ forecasts for GDP growth, inflation and future rate increases.

CURRENCY FUTURES

The U.S. dollar index is lower today but remains near the highest level since late 2002.  

Industrial production in the euro area increased 0.4% month-to-month in April of 2022, rebounding from a downwardly revised 1.4% drop in March but less than market forecasts of a 0.5% increase.

The European Central Bank unexpectedly announced it would hold an emergency meeting to discuss current market conditions in regard to the sharply higher Italian bond yields.

The Bank of England is predicted to deliver a quarter point rate hike on Thursday.

INTEREST RATE MARKET FUTURES

Financial futures market are now pricing a 75 basis-point hike from the Federal Open Market Committee today.

Financial futures markets are predicting there is a 98.6% probability that the Federal Open Market Committee will hike its fed funds rate by 75 basis points and an 1.4% probability that the  rate will increase by 100 basis points.

It is anticipated that the Fed will raise interest rates by 50 basis points at the July and  September meetings.

Currently the Fed’s focus is clearly on inflation, while a slowing economy will be problem for the Fed to deal with later.

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