However, after May’s consumer price index (CPI) data, which were higher than expected, the idea of a 75 basis point rise has been spreading.
In addition, a report in the Wall Street Journal on Monday and forecasts from several banks, including JP Morgan and Goldman Sachs, pointed to a 75 basis point rise, reinforcing expectations of a sharp tightening.
According to CME’s FedWatch tool https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html?redirect=/trading/interest-rates/fed-funds.html, traders believe that the probability of a rise of 75 basis points is greater than 90%, compared to 3.9% a week ago.
Data on Wednesday showed that the producer price index (PPI), although slightly lower than expectations on a year-on-year basis for May, remained high as gasoline prices rose.
“Ultimately, while we’re seeing even more red and more negative pressure here, overall today we think it’s really a wait-and-see day,” said Greg Bassuk, CEO of AXS Investments.
“Today’s PPI figures remove any doubt about the extent of rising prices and inflation, the big question is going to be how aggressive the Fed is going to be literally this week.”
Based on preliminary data, the S&P 500 lost 13.82 points, or 0.37%, to 3,735.81, while the Nasdaq gained 17.49 points, or 0.16%, to 10,826.72. The Dow Jones Industrial Average fell 144.73 points, or 0.47%, to 30,372.01. (Reporting by Anisha Sircar in Bengaluru Edited in Spanish by Ricardo Figueroa)
Source: Ambito
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