It is Fed day and they are expected to raise interest rates a quarter point at 1:00 p.m. Central. What’s unknown though is the tone in which they will do such. There was a report yesterday that Fed Chair Powell wants to hold a press conference after each meeting. The Dollar jumped, Treasuries ticked down and equity markets hit a midday snag. Doing this would essentially make each meeting live, giving the FOMC additional opportunities to hike.
With a rate hike in June considered a done deal, investors may be more concerned with the economic projections and press conference with Fed Chair, Jerome Powell. Markets are poised to closely scrutinize the Fed’s monetary policy statement for clues on how fast the Fed may raise interest rates during the second half of this year.
The price of Bitcoin has fallen below $6,500 to reach its lowest level since Feb. 6. That was a day when it found significant support from around the $6000 mark which led to an eventual recovery to almost $12000 later on in the month. But it doesn’t feel like such a sudden rally will be on the cards again this time. Bitcoin has been trending lower along with other crypto currencies since early March and no end to the bear trend appears to be in sight.
While the markets await the outcome from the Fed meeting and oil traders fret about whether OPEC and non-OPEC might raise production, as well as the weekly supply report, the biggest threat to the price of crude oil and the global economy may be the lack of spare oil production capacity. Reuters reports that global spare oil production capacity could fall from more than 3% of global demand now to about 2%, its lowest since at least 1984, if OPEC, Russia and other producers decide to increase output when they meet on June 22-23. Some analysts say spare capacity could even fall below 2%, after years of low oil prices drove down investments in new production across the industry to a historic low.
This is the biggest week of the year and the euro started off on solid footing. It is still having difficulty getting through technical resistance but firm comments from Italian Finance Minister that they will not leave the Euro were supportive.