Wall Street is clearly in waiting-on-the-Fed mode, but optimism is growing that the Fed might end up being done with their rate hiking cycle. The data-dependent Fed has locked themselves into a skip and that seems to be mostly priced in. Even if we get a somewhat hot inflation report next week, they are likely to keep rates steady at the June 14th meeting. Now that we are seeing weakness in the service sector and overall softness is emerging in the labor market, we should anticipate that the inflation numbers are going to start to look a lot better given the base effects. There is a chance that data could warrant a pause at the July meeting, which might mean Wall Street might think we are done with rate hikes.
US stocks are rising after a decent jump in jobless claims cooled some Fed rate hiking bets. The economy is slowing down and if we get further signs that the labor market is cooling, that could be enough for the Fed to pause tightening throughout the summer.
US Data
Jobless claims rose to the highest levels since October 2021. Weekly jobless claims posted an increase of 28,000 claims, bringing the total to 261,000 claims. The Memorial Day shortened-week may have impacted this data, but given all the corporate layoff announcements we have been hearing, we might need next week to confirm the weakening trend.
All eyes will be on next week’s inflation report and that should the disinflation process is in place but that shelter costs are keeping core CPI sticky.
S&P 500 Index
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Ed Moya
Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.
His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.
Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.
Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.
Ed holds a BA in Economics from Rutgers University.
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