June Fed Interest Rate Hike In Sight

June Fed Interest Rate Hike In Sight

June Fed Interest Rate Hike In Sight

$DIA, $SPY, $QQQ, $VXX

The US Fed officials said it would appropriate to raise interest rates in June if economic data points to stronger Q-2 growth as well as firming inflation and employment, according to the FOMC mins from their policy meeting in April.

That view suggests the US central bank is closer to lifting rates again than Wall Street expected.

The policymakers said recent data made them more confident inflation was rising toward the Fed’s 2% target, and that they were less concerned about a global economic slowdown, according to the minutes released Wednesday afternoon.

“Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor markets continued to strengthen, and inflation making progress toward the committee’s 2 percent objective, then it likely would be appropriate for the committee to increase the target range for the federal funds rate in June,” according to the minutes.

Prices for futures contracts on the Fed’s benchmark overnight lending rate implied that investors saw a 34% chance of a rate increase in June, up from 19% shortly before the release of the minutes.

US stocks pared gains and the USD extended gains Vs a basket of peer currencies after the minutes were released. Treasury yields rose, with the yield on 30-year US Bonds rising to a 2-week high.

Some Fed policymakers at the April meeting expressed concern about a slowdown in US economic growth during Q-1, when GDP (gross domestic product) expanded at an annual rate of 0.5%, a 2-year low.

But others argued that ongoing robust job growth suggested the economy had not gone off the track and that the growth data could be flawed.

“Most pointed to the steady improvement in the labor market as an indicator that the underlying pace of economic activity had likely not deteriorated,” according to the minutes.

Some policymakers said they were concerned financial markets could be roiled by a possible British exit from the EU in a vote next month or by China’s exchange rate policies.

At its April meeting, the Fed kept its target overnight interest rate in a range of 0.25 to 0.50%. It raised rates in December for the 1st time in nearly a decade.

Wednesday, US major stock market indexes finished at: DJIA -3.36 at 17526.62, NAS Comp +23.39 at 4739.12, S&P 500 +0.42 at 2047.63

Volume: Trade was lower than the recent averages with about 758-M/shares exchanged on the NYSE.

  • NAS Comp -5.4% YTD
  • Russell 2000 -3.1% YTD
  • S&P 500 +0.2% YTD
  • DJIA +0.6% YTD
HeffX-LTN Analysis for DIA:  Overall Short Intermediate Long
Neutral (-0.05) Neutral (0.13) Bearish (-0.29) Neutral (0.00)
HeffX-LTN Analysis for SPY:  Overall Short Intermediate Long
Neutral (-0.11) Neutral (-0.11) Bearish (-0.29) Neutral (0.06)
HeffX-LTN Analysis for QQQ:  Overall Short Intermediate Long
Bearish (-0.34) Bearish (-0.25) Bearish (-0.38) Bearish (-0.40)
HeffX-LTN Analysis for VXX:  Overall Short Intermediate Long
Bearish (-0.36) Bearish (-0.38) Bearish (-0.37) Bearish (-0.33)

Stay tuned…

 

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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