The tone in risk markets is modestly improved this morning, and as a result, Treasury yields are drifting higher. The focus this week will be on Wednesday’s FOMC meeting, as well as anticipation of next week’s G20 summit in Japan. Regarding the former, the general expectation for now is that the Fed will set the table for the initiation of policy easing at the next meeting in July. For the G20 summit, Commerce Secretary Wilbur Ross said the best that can be hoped for is a resumption of negotiations between U.S. and Chinese officials.
If the Fed does indeed decide to keep the policy rate unchanged this week, it will give them more time to assess growth and inflation implications of the U.S./China skirmish (and see what comes from the G20 summit). As such, the communication on Wednesday will be very tricky for Fed leaders. If all goes according to market expectations, Fed Chair Powell will effectively have to open the door for a July rate cut without implying that such a decision is a “done deal.” The updated Summary of Economic Projections should show a lower projected path for the fed funds rate from FOMC participants, as well as lower GDP and inflation forecasts.
Managing Director, Investment Management Group
|6/17/2019||NAHB Housing Market Index||67||—||66||—|
|6/17/2019||Net Long-term TIC Flows||$30.8b||—||-$28.4b||—|
|6/17/2019||Total Net TIC Flows||—||—||-$8.1b||—|
|6/18/2019||Housing Starts MoM||0.40%||—||5.70%||—|
|6/18/2019||Building Permits MoM||0.20%||—||0.60%||0.20%|
|6/19/2019||MBA Mortgage Applications||—||—||26.80%||—|
|6/19/2019||FOMC Rate Decision (Upper Bound)||2.50%||—||2.50%||—|
|6/19/2019||FOMC Rate Decision (Lower Bound)||2.25%||—||2.25%||—|
|6/19/2019||Interest Rate on Excess Reserves||2.35%||—||2.35%||—|
|6/20/2019||Current Account Balance||-$124.3b||—||-$134.4b||—|
|6/20/2019||Initial Jobless Claims||220k||—||222k||—|
|6/20/2019||Philadelphia Fed Business Outlook||10.4||—||16.6||—|
|6/20/2019||Bloomberg Consumer Comfort||—||—||61.6||—|
|6/20/2019||Bloomberg Economic Expectations||—||—||52.5||—|
|6/21/2019||Markit US Manufacturing PMI||50.5||—||50.5||—|
|6/21/2019||Markit US Services PMI||51||—||50.9||—|
|6/21/2019||Markit US Composite PMI||—||—||50.9||—|
|6/21/2019||Existing Home Sales||5.25m||—||5.19m||—|
|6/21/2019||Existing Home Sales MoM||1.20%||—||-0.40%||—|
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