Let’s talk about the Fed!

Heading Into Fed Week

  • The Federal Reserve meets June 13-14 for its next policy meeting. Following the May meeting, investors expected the Fed to hold rates steady and that they were done hiking rates for this cycle. However, towards the end of May, the Fed futures markets were placing a two-thirds probability that the Fed would hike an additional 25 basis points in June.
  • That sentiment was short-lived and quickly collapsed back down to the high twenties by May 31st and into the first week of June.
  • The Fed is trying to weigh the recent jobs and economic data, which point to an economy that may still be running well above their 2% inflation target, with the competing issue of the recent regional banking turmoil still fresh in their minds.
  • The next inflationary report comes out on the first day of the Fed’s meeting, June 13th, and Bloomberg’s latest survey of economists shows a consensus expectation of a 4.1% annual price increase, which would be a fair significant improvement from April’s 4.9%.