Good morning traders!
The S&P 500 ($SPY) is trading near yesterday’s close. Let’s get into it…
Federal Reserve Chairman Jerome Powell is scheduled to testify before Congress over the next two days. During his testimony, Powell is likely to reiterate that the Fed’s decision on interest rates will depend on upcoming economic data. Powell may also hint that the pace of rate hikes could slow down in order for the Fed to properly assess the data as it becomes available.
The Fed’s last policy decision resulted in a quarter-point hike, and expectations are that the central bank will implement another quarter-point increase at its upcoming policy meeting. However, there are indications that the chances of a half-point hike have been increasing.
The Fed’s last dot plot projection for the terminal rate, or the point at which the central bank would stop raising interest rates, was as high as 5.25%. However, recent economic data shows that a higher rate may be necessary. For instance, nonfarm payrolls increased in January, while retail sales beat expectations. Inflation is also running at 6.4%, which is better than the double-digit figures from last year, but still higher than the Fed would prefer. The Fed’s preferred measure, the personal consumption deflator minus food and energy, is also more than twice as high as the central bank would like to see it.
While there’s a chance that the recent economic outperformance may be an anomaly or the result of seasonal adjustments, the data is currently indicating that the Fed may need to consider a rate increase above 6%.
We advise everyone to trade with caution today or avoid trading altogether. It’s better to wait for more stable trading days, especially for novice traders.
Note: Moving averages are reported from the previous trading session and will change during the next trading session.
Tuesday Economic Events:
Redbook Sales 8:55am ET
Wholesale Inventories 10:00am ET
Short-Term Energy Outlook 12:00pm ET – High Volatility Expected
Consumer Credit 3:00pm ET
API Crude Oil Data 4:30pm ET
Fed Speaker Scheduled:
Jerome Powell 10:00am ET – High Volatility Expected
This article provided by the DailyBubble team should only be considered as informational and/or entertainment by the reader. DailyBubble makes no representation to buy or sell any security or financial instrument within the article. Readers seeking investment advice should seek independent financial advice from a professional, and independently research and verify. The DailyBubble team wrote this article and may express its own opinions therein.