Friends
The bulls were feeling pretty good about themselves during the midday portion of today’s trading session. After a bit of an ugly start to trading, the bulls had turned the tide and driven share prices higher with the Dow sporting a nifty 100 point gain right before 1:00 pm and the release of last month’s FOMC minutes. Then the minutes were released and things changed quickly (the Dow gains evaporated into losses, at least temporarily). Fed futures had put the odds of a June rate hike at only 4% before the release, but that spiked to 42% after the release. Indeed, the minutes contained a much different tone amongst Fed officials than had been expected. It appears that they would really like to raise rates in June, and were a little worried that the market didn’t believe them. Of course, they continue to insist that they are data dependent, and if that is true, recent Q1 GDP numbers, retail sales and negative global interest rates would seem to temper their enthusiasm. So the tug of war continues, but at least for today, the markets are not totally dismissing the potential of an interest rate move in June.
As for stocks, by the close things were mixed with the Dow Jones Industrial Average down 3 points to finish the day at 17,526. The S&P 500 was up a fraction to close at 2047. Gold was down $19 to trade at $1,257 an ounce, while oil was down $.50 to trade at $47.81 per barrel WTI.
As with last December’s rate hike, if the Fed goes in June it will likely be because they said that they would. Remember, many Fed officials were crowing that we would see four or more rate hikes this year. If they want to get in even two rate hikes, it would seem likely that they need to move on the first one sooner than later. Unfortunately, the data dependent Fed has not had a lot of data to help support their carnal desires.
Have a nice evening everyone.
