Rate Hike Probabilities
However, market sentiment reversed last week from bearish to bullish as market participants anticipate that the Federal Reserve will not raise rates as they have at the last 10 consecutive FOMC meetings beginning in March 2022. According to the CME’s FedWatch tool, there is a 71.2% probability that the Fed will not raise their benchmark interest rate for the first time in over a year, with only a 28.8% probability that they will raise rates by ¼%.
However, the pause in rate hikes could be short-lived according to the CME’s probability indicator. It is predicted that there is a 53% probability that the Fed will raise its benchmark rate by ¼%, and a 16.4% probability that they will raise rates by ½ % at the July FOMC meeting.
PCE Report on Tap
The BEA will release the PCE price index report on Tuesday. This is the preferred index used by the Federal Reserve and the report will contain the most current inflationary data for May 2023. This report will be the most current information on inflation that the Federal Reserve will use to make its final decision on its monetary policy.
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Wishing you as always good trading,
Gary S. Wagner
amp.fxempire.com