Despite the pressure still evident in both the financial markets and economic data, market participants are still very confident that the Fed will take a wait-and-see approach to rates come June 25th. In fact, Fed Fund futures show there is a 94 percent probability the FOMC will hold the benchmark at 2.00 percent next month. However, this outlook is heavily dependent on the basis that the worst of the credit crunch is over.
What do you think the Fed will do in June? Hold or cut? Join the debate in the DailyFX Forex Forum.
Improving outlook means the Federal Reserve could use this indicator to
support a rate hike. The opposite stands for a deteriorating outlook.
CREDIT MARKET: HOW IS IT DOING?
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A DEEPER LOOK INTO THE CHANGES THIS WEEK:
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FINANCIAL MARKETS: HOW ARE THEY DOING?
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A DEEPER LOOK INTO THE CHANGES THIS WEEK:
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| In addition to the steady gains in capital markets, investors have enjoyed a significant improvement in general activity. The S&P 500 Volatility Index dropped to its lowest level since October, portending steady markets into the foreseeable future. What’s more, the outlook for a sustained bullish run is reflected in options, which saw the put-call ratio report the weakest net demand for puts this year. However, just as quickly as sentiment can change in these still cautious markets, volatility could just as easily rebound as traders rush for the exits. |
U.S. CONSUMER: HOW ARE THEY DOING?
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A DEEPER LOOK INTO THE CHANGES THIS WEEK:
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| Investors and policy makers are intently analyzing any data that may divine the future for the world’s largest economy. The greatest potential contribution to an optimistic outlook could be found in the recent consumer spending data. The retail sales report for April showed that, though spending on autos took a significant hit, Americans were still making discretionary purchases. What’s more encouraging, spending on housing related goods improved while gasoline receipts were virtually unchanged. If this marks a genuine trend, the economic stimulus checks from the government could act as an accelerant. |
Have comments or questions on this or other articles authored by John? E-mail him at jkicklighter@dailyfx.com.
