Investors See a Rate Hike From the FOMC Wednesday
$DIA, $SPY, $QQQ, $RUTX, $VXX
- Retail investors are not waiting to see inflation coming, they know it is here.
And are moving money into securities that hedge against risks of rising price pressures as the U Labor Department is set to give its latest reading on consumer prices Tuesday.
The US CPI already is rising at an annual pace of more than 2%, and higher prices at the gas pump helped sparked a record $1.2-B inflow last week into the Top 10 ETFs (exchange-traded funds) focused on Treasury Inflation Protected Securities (TIPS).
Over the past 2 weeks, a total of $1.74-B has flowed into these ETFs, comparable to the amount seen during a similar-sizer period surrounding the 2016 US Presidential election frame.
Rising gasoline prices probably helped fuel a 2.7% Y-Y surge in the May consumer-price index, the biggest advance since February 2017, economists forecast for the report Tuesday.
The core CPI is projected to climb 2.2%, the most in more than a year.
The breakeven inflation rate is traders’ outlook for CPI over the years ahead, signaled by 10-year inflation-linked Treasuries traded Monday at 2.13%, up from 2.09% at the end of last month and from 1.78% a year ago.
Staying Bullish on Break-evens.
The CPI’s anticipated move higher sets the stage for economists’ predictions that the Fed will likely this week lift the target rate range by 25 bpts Wednesday.
Investors didn’t receive any notable economic data Monday.
Tuesday’s reports include the Consumer Price Index for May (consensus +0.3%), the Treasury Budget for May, and the NFIB Small Business Optimism Index for May.
Monday, the major US stock market indexes finished at: DJIA +5.78 at 25322.31, NAS Comp +14.41 at 7659.93, S&P 500 +2.97 at 2782.00
Volume: Trade on the NYSE came in at 875-M/shares exchanged
- NAS Comp +11.0% YTD
- Russell 2000 +9.1% YTD
- S&P 500 +4.1% YTD
- DJIA +2.4% YTD