FTSE 100 nudges up ahead of Fed decision following broadly expected CPI data
According to the CME FedWatch Tool, it is near-certain that the Fed will maintain rates at the 4.25%-4.50% range this week. The Fed held in each of the first three meetings this year. Its last cut was in December, a 25 basis point trim to the federal funds rate range.
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NBC News
2 days ago
- NBC News
S&P 500 posts third straight losing day as traders eye Middle East tensions, Trump's next steps
The S&P 500 fell on Friday as investors monitored the latest developments out of the Middle East. Traders also contemplated the path of future interest rate cuts by Federal Reserve. The broad market index declined 0.22% to end at 5,967.84, while the Nasdaq Composite dropped 0.51% and settled at 19,447.41. The Dow Jones Industrial Average ticked up 35.16 points, or 0.08%, closing at 42,206.82. Chip stocks came under pressure following a report by The Wall Street Journal that the U.S. may revoke waivers for some semiconductor manufacturers. Nvidia was down more than 1%, while Taiwan Semiconductor Manufacturing slid nearly 2%. The VanEck Semiconductor ETF (SMH) was lower by nearly 1%. The S&P 500 started off the trading session higher after Federal Reserve Governor Christopher Waller said that the central bank could cut rates as early as July. 'I think we're in the position that we could do this and as early as July,' Waller said during a ' Squawk Box ' interview. 'That would be my view, whether the committee would go along with it or not,' he added. This comes after Fed Chair Jerome Powell said Wednesday the central bank was in no hurry to cut benchmark rates and will remain data dependent, especially as it remains unclear how President Donald Trump's tariffs will impact the economy. The S&P 500 closed slightly lower that day following those remarks. Trump ripped into Powell again Thursday, saying the Fed Chair is costing the U.S. 'hundreds of billions of dollars' by delaying rate cuts. The president said ahead of the Fed's decision Wednesday that 'stupid' Powell 'probably won't cut' rates. Tensions around the Israel-Iran conflict also remained high, as Israeli Prime Minister Benjamin Netanyahu is reportedly ordering Jerusalem's military to strike 'strategic targets' in Iran, as well as 'government targets.' Trump is weighing direct U.S. involvement with a strike on Tehran, with the White House on Thursday saying that he will make a final decision within the next two weeks. Trump previously called for Tehran's complete surrender, to which Iran's supreme leader, Ayatollah Ali Khamenei, labeled the notion 'threatening and ridiculous.' 'With so much uncertainty going on in this world, who really wants to go long over the weekend,' said Sam Stovall, chief investment strategist at CFRA Research. He also pointed out that the S&P 500 is still trading at just around 3% below its recent 52-week high, saying that 'prior highs act like rusty doors and require several attempts before finally swinging open.' 'If there's a calming down of the geopolitical activities, then you know that could be helpful,' he continued. For the week, the S&P 500 was about 0.2% lower. The 30-stock Dow eked out a 0.02% gain on the week, while the Nasdaq advanced 0.2%.
Reuters
2 days ago
- Reuters
Exclusive: Fed's Barkin: No rush to cut, can't dismiss inflation risks from tariffs
WASHINGTON, June 20 (Reuters) - Richmond Federal Reserve President Thomas Barkin said on Friday there's no rush to cut interest rates given the still-unresolved risk that new import taxes might raise inflation, and with the U.S. job market and consumer spending holding up. "I don't think the data gives us any rush to cut...I am very conscious that we've not been at our inflation target for four years," Barkin said in a Reuters interview, noting that businesses in his district still expect price increases to come later in the year as new tariffs take effect, and the fact that import duties may rise even further in coming months. In addition, he said, the jobless rate remains low at 4.2%, and firms don't appear on the cusp of major layoffs that would undercut the Fed's other goal of maintaining maximum employment. Spending "is holding up fine. It's not frothy. It's not weak." "Nothing is burning on either side such that it suggests there's a rush to act," Barkin said in his first public comments following a Fed meeting this week at which the central bank held its policy rate steady in the current range between 4.25% and 4.5%. "I'm not in a mood to ignore a spike in inflation were it to have to see if it comes. "I'm comfortable with where we inflation is still over target. Being modestly restrictive is a good way to address that." Barkin's comments come at a moment of exaggerated uncertainty for the Fed and the U.S. economy, with tariffs already higher on some goods and potentially increasing again as soon as next month when the Trump administration has set a July 9 deadline for other nations to either strike trade deals with the U.S. or face possibly exorbitant taxes on their goods. Only one deal has been struck so far, leaving the Fed in a muddle over what the final tax rates might be, and how they might be divided among foreign producers, U.S. importers, and the retail price charged to consumers. There's debate as well about whether any price impact will be a one-time shock or create more enduring inflation, and whether it could lead to supply chain issues that slow growth and increase joblessness. The Trump administration says the tariffs will ultimately help the U.S. economy, and the president has demanded the Fed slash rates immediately. New Fed economic projections this week, by contrast, anticipate slower growth and higher inflation. Yet those projections also showed policymakers still anticipate rate cuts later in the year - a sign they do feel tariffs will raise prices but not in a persistent way. Barkin noted the close split of opinion, with 10 policymakers seeing two or three quarter-point cuts this year, and nine seeing one or none. "There are two perfectly reasonable views that are articulated there," Barkin said, based on expectations about the economy and inflation, and Fed officials' sense of which risks are more worrisome. The median projection is for two quarter-point cuts this year. But Barkin said that, in his mind, there are several compelling narratives for what might happen in coming months, from tariffs being passed along fully to consumers and raising prices, to businesses trying to absorb them through job cuts that raise unemployment. With key tariff decisions still pending, "I don't have a lot of conviction about where (trade) policy is going to be. I just have to accept that," he said. "I also don't have conviction on what the impact is going to be on our mandate variables" of inflation and unemployment. "There will be some inflationary impact. It's hard to know how much." Businesses in his district, which runs from Maryland through South Carolina, tell him they are wrestling with the same questions, and remain largely on the sidelines when it comes to both capital investment and major labor market decisions, a static environment that could slow growth but also keep the unemployment rate relatively stable in a "low-hiring-low-firing" equilibrium. Sentiment has improved since April, he said, when massive and since-delayed tariffs on China put businesses in a tailspin wondering about access to products and product inputs. But the final outcome remains up in the air. "I'd say the overwhelming reaction we're still getting is wait and see," Barkin said. "Wait and see is not put your foot on the brakes. It's just not put your foot in the gas."
NBC News
2 days ago
- NBC News
Fed should consider cutting rates as early as July, official says
Federal Reserve Governor Christopher Waller said Friday that he doesn't expect tariffs to boost inflation significantly so policymakers should be looking to lower interest rates as early as next month. In a CNBC interview, the central banker said he and his colleagues should move slowly but start to ease as inflation is now longer a major economic threat. 'I think we're in the position that we could do this and as early as July,' Waller said during a 'Squawk Box' interview with CNBC's Steve Liesman. 'That would be my view, whether the committee would go along with it or not.' The comments come two days after the Federal Open Market Committee voted to hold its key interest rate steady, the fourth straight hold following the last cut in December. President Donald Trump, who nominated Waller as a governor during his first term in office, has been hectoring the Fed to lower interest rates to reduce borrowing costs on the $36 trillion national debt. In his remarks, Waller said he thinks the Fed should cut to avoid a potential slowdown in the labor market. 'If you're starting to worry about the downside risk labor market move now don't wait,' he said. 'Why do we want to wait until we actually see a crash before we start cutting rates? So I'm all in favor of saying maybe we should start thinking about cutting the policy rate at the next meeting, because we don't want to wait till the job market tanks before we start cutting the policy rate.' Whether Waller will be able to marshal much support for his position is unclear. The FOMC, Waller included, voted unanimously to hold at this week's meeting, keeping the benchmark federal funds rate locked in a target range of 4.25%-4.5%. According to the 'dot plot' of individual officials' expectations for interest rates this year, seven if the 19 meeting participants said they see rates holding steady this year, two saw just one cut likely, while the remaining 10 expect two or three reductions. The dispersion reflected a sense of uncertainty around policymakers about where rates should head. Trump has called for dramatic moves, saying he thinks the benchmark rate should be at least 2 percentage points lower and even suggested it should be 2.5 percentage points below the current level of 4.33%. However, Waller said he thinks the committee should be move slowly. 'You'd want to start slow and bring them down, just to make sure that there's no big surprises. But start the process. That's the key thing,' he said. 'We've been on pause for six months to wait and see, and so far, the data has been fine. ... I don't think we need to wait much longer, because even if the tariffs come in later, the impacts are still the same. It should be a one-off level effect and not cause persistent inflation.' Other officials have been reluctant to cut as they wait to see what longer-term impact Trump's tariffs have, primarily on inflation but also on the labor market and broader economic growth. Chair Jerome Powell said repeatedly at his post-meeting news conference Wednesday that he believes the Fed can stay in its wait-and-see mode as the labor market continues to hold up. Inflation data of late has shown little pass-through so far as companies burn off inventory accumulated in the run-up to the tariff announcement, and amid concerns that consumer demand is slowing and reducing pricing power. Futures market pricing indicates virtually no chance of a rate cut at the July 29-30 meeting, with the next move expected to come in September.
