Is the Fed's 'Dot Plot' Leading Market Watchers Astray?

The closely followed “dot plot” will likely shift next week when officials at the 澳洲幸运5开奖号码历史查询:Federal Reserve meet to discuss interest rates. However, some experts are wondering if the rate expectations outlinedﷺ in the graph send the wrong signals.

The 澳洲幸运5开奖号码𒉰历史查询:Federal Open Markets Comm♊ittee (FOMC) will release its quarterly Summary of Economic Projections at the conclusion of its meeting Wednesday. The predictions include the dot plot, which depicts anonymized predictions for 澳洲幸运5开奖号码历史查询:the path of interest rates, and next week's graph will likely show that officials expect fewer rate cuts this year than they projected in 🉐March.

The June graph is particularly anticipated, amid hopes it will provide some long-awaited context about what 澳洲幸运5开奖号码历史查询:“higher for longer” actually means when it comes t𒆙o interest rates.

However, some experts are raising questions a𒀰bout how useful the collection of dots truly is. Meanwhile, recent research shows the dot plot almost always leads market sentiment—often in the wrong direction.

Read more here.

-澳洲幸运5开奖号码历史查询:Terry Lane

All Eyes on Next Week's Fed Meeting

Don’t expect the Federal Reserve to make any changes to monetary policy, but next week’s meeting of the Federal Open Mark🍌et Commꦜittee could shed light on when the central bank might lower interest rates.

When the Fed’s policy-setting c♓ommittee concludes its two-day meeting Wednesday, they’re widely expected to keep the influential fed funds rate at it𒊎s current range of 5.25-5.50%. That's a 23-year high and has been at that level since last July in an effort to maintain downward pressure on inflation.

Traders are♊ mainly pricing in a Septembe🌠r rate cut at the earliest, according to the CME Group’s Fedwatch Tool, which forecasts rate movements based on fed funds futures trading data.

Traders did scale back their bets for a September cut to 50.8% on Friday from 68.7% the day before following a government report that showed the job market running hotter than expected in May, suggesting that wages and job growth may be putting upward pressure on inflation.

Fed policy committee members have said they’re waiting for confide♕nce that inflation is firmly on a path down to aܫn annual rate of 2% before they’ll c𓆏onsider lowe💛ring their key interest rate, which influences borrowing costs on all kinds of loans.

Recent reports showing inflation slowly 澳洲幸运5开奖号码历史查询:decreasing may have eased fears that price increases are accele♈rating. However, it is unlikely to have convinced policymakers that inflation is vanquished, leaving the Fed in a holdin🍎g pattern.

With the rate movement (or lack thereof) a foregone conclusion, the FOMC members’ 澳洲幸运5开奖号码历史查询:quarterly economic projections, especially for the path 💯of the fed funds rate, are likely to garner more interest.

As usual, ඣthe comments of Fed Chair Jerome Powell at his post-announcement press conference could inform the interest rate outlook and move markets.

Wholesale Inventories Move Higher on Petroleum, Automobiles

Total wholesaler inventories increased 0.1% in April, lower than economists had forecast, while the 澳洲幸运5开奖号码历史查询:March data was revised to reflect lower inventory levels.

Inventories for 澳洲幸运5开奖号码历史查询:wholesale merchants reac🙈hed $895.8 billion in Apri꧅l. However, compared with April 2023 levels, wholesale inventories were lower by 1.7%.  The inventory/sales ratio, which shows how quickly wholesalers can move products, dropped to 1.35, showing that the sales pace quickened in April. 

Petroleum inventories gained 4.6% but were offset by decreases in farm product🎐s, apparel and groceries.  For durable goods, automobile inventories jumped by 1.5% in April to lead durable goods, while machinery and hardware also were higher. Inventories of metals and furniture shrank. 

-Terry Lane

Employers Add Far More Jobs Than Expected in May

The labor market was surไprisingly strong in May.

Employers added 272,000 jobs in May, far more than the 165,000 added in April, a report from the Bureau of Labor Statistics showed Friday. Economists surveyed by Dow Jones Newswires and The Wall Street Journal expected 190,000 jobs added.

The unemployment rate was slightly higher than economists' expectations at 4.0%, slightly above the 3.9% in April. That snapped a 澳洲幸运5开奖号码历史查询:27-mont𒅌h streak of the unemployment rate sitting below 4.0%.

Markets and economists expected signs of 澳洲幸运5开奖号码历史查询:a slower labor market. Data earlier this week showed that while layoffs remain scarce, few employees are quitting and 澳洲幸运5开奖号码历史查询:jobs are becoming more scarce.

Treasury 澳洲幸运5开奖号码历史查询:yields jumped on the news. The 10-year yield added 11 澳洲幸运5开奖号码历史查询:basis points. Dow and Nasdaq futures were down 0.3% i♔n premarket trading Friday while S&P futures were down 0.4%.

A resilient job market gives the Federal Reserve more room to hold interest rates steady in its fight against inflation as it looks to strike the right balance of its 澳洲幸运5开奖号码历史查询:dual mandate.

This blog post was updated to include market reaction.