Led by the financials and technologies, equities advanced before today’s release of the Federal Reserve’s preferred measure of inflation; the PCE deflator (Personal Consumption Expenditure deflator).
The acknowledged core speed limit is 2.0%. Analysts are expecting the core PCE to rise by 4.3%, no change from the prior quarter as per Bloomberg.
Volatility may increase if the data is higher than expected, perhaps challenging the notion-perhaps an unfounded notion—that the Fed will begin to lower interest rates by June/July.
Speaking of Treasuries, the bond market was relatively quiet yesterday as the narrative is increasing about the disconnect between the futures market and expected Fed policy.
Speaking of Fed policy, FRB Chair Powell was asked in a private meeting with lawmakers how much further the central bank will raise interest rates this year. He pointed to policymakers’ latest forecasts [the Dot Plot] indicating one more 0.25% increase. Powell further remarked rates may be around 5.10% at year’s end.
What will happen today? Bloomberg writes the NASDAQ is poised to have its best quarter since 2020, primarily the result of an expected change in monetary policy by June/July.
What will happen today?
Last night the foreign markets were up. London was up 0.96%, Paris up 1.44% and Frankfurt up 1.34%. China was up 0.65%, Japan down 0.36% and Hang Seng up 0.58%.
Futures are up about 0.50% on the belief that peak rates are at hand and banking turmoil will continue to subside. The 10-year is up 3/32 to yield 3.56%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
