Monday, June 26th, 2023
We’re starting off the final trading week of the month of June and calendar Q2 on a quiet note: no economic reports are due out today, either ahead of the opening bell or afterward. That’s not to say we won’t have an eventful week — for sure we will. Tomorrow alone we’ll see new Durable Goods Orders, Case-Shiller Home Prices, New Home Sales and Consumer Confidence.
We’ll also see Pending Home Sales later in the week, for a more complete update on the housing market overall. On Friday, we’ll get Personal Consumption Expenditures (PCE) for May, which the Fed will be paying close attention to as it determines whether to reconvene interest rate hikes at its next FOMC meeting in one month’s time.
While we hate to hang so much importance on whether another rate hike (or two) is forthcoming — if there’s one thing we know for certain, it’s that the Fed has already made the lion’s share of its interest rate moves over the past 15 months, including four straight sessions that saw 75 basis point (bps) hikes which began roughly a year ago. We’re now at the highest Fed funds rate since prior to the financial collapse that led to the Great Recession, which happened nearly 15 years ago.
But the fact of the matter is, the Fed still drives the bus at present. This will be the case likely through at least the beginning of Q2 earnings season, which begins in earnest mid-next month. At that point, we’ll be able to see more clearly the second half of the year in terms of company guidance across industries, and whether — as market participants are beginning to believe with more confidence — that a recession may ultimately be avoided, at least for 2023.
Market indices remain flapping in the wind a bit this morning. The Dow is -33 points at this hour, the S&P 500 is -3 and the Nasdaq -5 points. Apparently, we’re still rolling back the big windfall gains we saw a couple weeks ago, back when investors had convinced themselves that a rate hike pause at the last Fed meeting meant monetary policy was over with higher interest rates. As we’ve heard in statements and presentations since, this is not the current mindset of Fed members.
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The Fed Still Drives the Bus
Monday, June 26th, 2023
We’re starting off the final trading week of the month of June and calendar Q2 on a quiet note: no economic reports are due out today, either ahead of the opening bell or afterward. That’s not to say we won’t have an eventful week — for sure we will. Tomorrow alone we’ll see new Durable Goods Orders, Case-Shiller Home Prices, New Home Sales and Consumer Confidence.
We’ll also see Pending Home Sales later in the week, for a more complete update on the housing market overall. On Friday, we’ll get Personal Consumption Expenditures (PCE) for May, which the Fed will be paying close attention to as it determines whether to reconvene interest rate hikes at its next FOMC meeting in one month’s time.
While we hate to hang so much importance on whether another rate hike (or two) is forthcoming — if there’s one thing we know for certain, it’s that the Fed has already made the lion’s share of its interest rate moves over the past 15 months, including four straight sessions that saw 75 basis point (bps) hikes which began roughly a year ago. We’re now at the highest Fed funds rate since prior to the financial collapse that led to the Great Recession, which happened nearly 15 years ago.
But the fact of the matter is, the Fed still drives the bus at present. This will be the case likely through at least the beginning of Q2 earnings season, which begins in earnest mid-next month. At that point, we’ll be able to see more clearly the second half of the year in terms of company guidance across industries, and whether — as market participants are beginning to believe with more confidence — that a recession may ultimately be avoided, at least for 2023.
Market indices remain flapping in the wind a bit this morning. The Dow is -33 points at this hour, the S&P 500 is -3 and the Nasdaq -5 points. Apparently, we’re still rolling back the big windfall gains we saw a couple weeks ago, back when investors had convinced themselves that a rate hike pause at the last Fed meeting meant monetary policy was over with higher interest rates. As we’ve heard in statements and presentations since, this is not the current mindset of Fed members.
Questions or comments about this article and/or author? Click here>>