Months of hints and speculation about when the Fed may start raising rates appears set to come to a head at 2:00 pm EDT today when the FOMC releases its latest interest rate decision, statement and member projections. A 0.25% interest rate increase has been widely expected by investors for some time. As such, the FOMC member projects and statement could be more important, particularly the dot plot of Fed Funds forecasts with investors wondering how many more rate hikes could be possible this year and if rate increases could accelerate with inflation running hot.
Ahead of today’s decision, the US 10-year treasury note yield has run up toward 2.15%, its highest level since July of 2019. US retail sales, the last major economic report before the Fed decision, were mixed with February sales growth of 0.3% slightly below the 0.4% street estimate, but January sales growth being revised upward to 4.9% from 3.8%. Canada consumer prices increased more than expected (5.7% vs street 5.5% and previous 5.1%) indicating inflation pressures continue to intensify north of the border.
Building on yesterday’s US index gains of 1.8% to 2.9%, overseas markets have been surging. China has roared back to life with Hong Kong snapping back from two days of losses with a 9.1% pop, and Shanghai soaring 3.5%. In Europe today, the Dax is up 3.4%, while the FTSE is up 1.4%. US index futures are up 1.2%-1.9% with the NASDAQ leading the way higher.
Energy and metals markets appear to be stabilizing after getting slammed yesterday. WTI and Brent Crude have stabilized in the $95.00-$100.00 area with gains of 0.4% to 0.7%. Copper is up 2.4% today, while gold continues to drift, down 0.4% and trading near $1,920/oz.