From Tim Duy at Bloomberg: Not June, Not Likely July, More Likely September
The best-laid plans can come undone by the tiniest of things.
In this case a slip in the data—a low print on nonfarm payrolls that may prove no more than a statistical bump—put a June interest rate hike out of reach for the Federal Reserve and probably a July one as well. That leaves September in focus as the next chance for the U.S. central bank to tighten policy—if the data hold.
The FOMC statement will be followed by a press conference. There Yellen will steer a middle ground between optimism and pessimism. Keeping a July hike in play will be her primary objective. With even her believing the economy is near full employment, the Fed will not yet give up on the story that an economic bounce in the second quarter will be sufficient to justify a rate hike in July.
Bottom Line: The optimistic tale spun by Yellen tells us that the Fed is ready and willing to hike rates. But that pesky little detail of a consistent data narrative to justify such a move continues to elude policymakers. The lack of supportive data has stripped them of a chance to hike rates in June, and also leaves July as an unlikely candidate. Turn your eyes to September.
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.
• At 8:30 AM, The Producer Price Index for May from the BLS. The consensus is for a 0.3% increase in prices, and a 0.2% increase in core PPI.
• Also at 8:30 AM, the New York Fed Empire State manufacturing survey for June. The consensus is for a reading of -3.5, up from -9.0.
• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for May. The consensus is for a 0.1% decrease in Industrial Production, and for Capacity Utilization to decrease to 75.2%.
• At 2:00 PM, FOMC Meeting Announcement. No change to the Fed Funds rate is expected at this meeting.
• Also at 2:00 PM, FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants’ projections of the appropriate target federal funds rate along with the quarterly economic projections.
• At 2:30 PM, Fed Chair Janet Yellen holds a press briefing following the FOMC announcement.