Treasuries are giving up some of yesterday’s gains ahead of today’s Fed meeting, and S&P 500 futures are little changed ahead of the open. Yesterday’s trading activity was driven largely by ECB President Mario Draghi’s ultra-dovish press conference, where he suggested more monetary accommodation was all but certain in the near future. However, a Reuters article posted late yesterday afternoon suggested that other ECB leaders were caught off guard by Draghi’s stimulus hints and that there was no consensus within the ECB Governing Council on the path ahead.
As discussed on Monday, the market is not expecting a rate cut from the Fed today, but guidance for policy easing in the very near future is expected. Market participants will be paying close attention to Jerome Powell’s press conference as he attempts to present a very tricky message, and the FOMC will also be releasing an updated Summary of Economic Projections.
On the data front, the MBA mortgage applications index fell 3.4% for the week ended June 14, including a 3.5% in refinance applications. There has been more focus on the potential for increased mortgage refi activity recently amid the strong rally in Treasuries, and the refi index rose 46.5% last week to the highest level since November 2016. For added perspective, current refi application activity, as measured by the MBA, is just 33% of what was experienced back in 2012 during the last major refi wave.
Managing Director, Investment Management Group
|6/19/2019||MBA Mortgage Applications||—||-3.40%||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||10.7||—||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||5.27m||—||5.19m||—|
|6/21/2019||Existing Home Sales MoM||1.40%||—||-0.40%||—|
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