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Pre-markets are witnessing mixed trading before the big event of the Fed’s June FOMC meeting decision. Fed Chairman Jerome Powell will deliver the post-FOMC statement at 2 PM EST today followed by a press conference.
Market participants are increasingly inclined toward the first pause of interest rate hike after 10 consecutive FOMC meetings. Per CME FedWatch, just a week ago, there existed a 72.5% probability that the Fed would keep the Fed fund rate unchanged at the current range of 5-5.25%. About 27.5% of respondents antipicated a 25-basis point rate hike.
The Consumer Price Index (CPI) for May released yesterday, showed that the headline CPI increased 4% year over year, its lowest monthly increase since March 2021. The core CPI (excluding volatile food and energy items) increased 5.3% year over year in May compared with 5.5% in April.
Following the news, the CME Fedwatch indicated a 93% probability of a pause in rate hike in the June FOMC and 7% chance for a 25-basis point hike. At present, the CME FedWatch shows a 95% probability of no rate hike in June with, a mere 5% chance for a 25-basis point raise.
However, a section of economists and financial researchers have warned that despite a pause in rate hike, the central bank is likely to signal that it may resume the higher interest rate regime in the near future if inflation sticks at its current level or financial data, especially the labor market data remains strong.
Meanwhile, the Department of Labor reported that the Producer Price Index (PPI) for final demand fell 0.3% month-over-month in May. The consensus estimate was for a decline of 0.1%. In April, the headline PPI increased 0.2%. Year over year, the headline PPI increased 1.1% in May compared with a rise of 2.3% in April.
The core PPI (excluding the volatile food and energy items) increased 0.1% month-over-month in May. April’s data was revised downward from an increase of 0.2% to 0.1%. Year over year, core PPI increased 2.8% in May compared with an increase of 3.3% in April.
On the earnings front, U.S.-based big homebuilder Lennar Corp. (LEN - Free Report) will report second-quarter fiscal 2023 earnings results today after the closing bell. The first-quarter 2023 earnings season is nearing its end. Earnings results are not great but better-than-expected.
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Producer Price Index Decreases for May
Pre-markets are witnessing mixed trading before the big event of the Fed’s June FOMC meeting decision. Fed Chairman Jerome Powell will deliver the post-FOMC statement at 2 PM EST today followed by a press conference.
Market participants are increasingly inclined toward the first pause of interest rate hike after 10 consecutive FOMC meetings. Per CME FedWatch, just a week ago, there existed a 72.5% probability that the Fed would keep the Fed fund rate unchanged at the current range of 5-5.25%. About 27.5% of respondents antipicated a 25-basis point rate hike.
The Consumer Price Index (CPI) for May released yesterday, showed that the headline CPI increased 4% year over year, its lowest monthly increase since March 2021. The core CPI (excluding volatile food and energy items) increased 5.3% year over year in May compared with 5.5% in April.
Following the news, the CME Fedwatch indicated a 93% probability of a pause in rate hike in the June FOMC and 7% chance for a 25-basis point hike. At present, the CME FedWatch shows a 95% probability of no rate hike in June with, a mere 5% chance for a 25-basis point raise.
However, a section of economists and financial researchers have warned that despite a pause in rate hike, the central bank is likely to signal that it may resume the higher interest rate regime in the near future if inflation sticks at its current level or financial data, especially the labor market data remains strong.
Meanwhile, the Department of Labor reported that the Producer Price Index (PPI) for final demand fell 0.3% month-over-month in May. The consensus estimate was for a decline of 0.1%. In April, the headline PPI increased 0.2%. Year over year, the headline PPI increased 1.1% in May compared with a rise of 2.3% in April.
The core PPI (excluding the volatile food and energy items) increased 0.1% month-over-month in May. April’s data was revised downward from an increase of 0.2% to 0.1%. Year over year, core PPI increased 2.8% in May compared with an increase of 3.3% in April.
On the earnings front, U.S.-based big homebuilder Lennar Corp. (LEN - Free Report) will report second-quarter fiscal 2023 earnings results today after the closing bell. The first-quarter 2023 earnings season is nearing its end. Earnings results are not great but better-than-expected.