Warsh’s First FOMC Message, China Retail Data in Focus for New York, Shanghai Stocks

June 16-17 FOMC meeting seen leaving rates unchanged

Markets also await the new Fed chair’s first monetary-policy message

The main event for U.S. stocks in the June 15-18 week is the Federal Reserve’s scheduled Federal Open Market Committee meeting. It will be the first meeting chaired by new Fed Chair Kevin Warsh. Wall Street has effectively locked in expectations that the benchmark rate will be left unchanged, leaving the market’s immediate focus elsewhere.

Investors are watching the message Warsh delivers at his first press conference as chair. Within the FOMC, support has been building for the Fed to raise rates. At the April FOMC meeting, Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan opposed including easing-biased language in the statement. They have continued to make hawkish public remarks since then.

In addition to those three officials, Fed Governor Christopher Waller said last month that a rate cut would be “crazy” and that a rate increase could not be ruled out. Warsh, known as being sympathetic to President Donald Trump, could find himself caught between Trump’s preference for lower rates and colleagues pressing for hikes. His first press conference may offer an early test of how this year’s FOMC meetings will be conducted.

The dot plot released with the decision is another market focus. Its long-term signaling value has diminished as external shocks such as the Iran war have proliferated and conditions have shifted quickly. U.S. financial markets will be closed on June 19 for Juneteenth.

Shanghai stocks will look for direction from key Chinese real-economy indicators due early in the week. The main focus is the May readings on industrial production, retail sales and fixed-asset investment, scheduled for release on June 16. April industrial output and retail sales both missed market forecasts, heightening concern about an economic slowdown. Whether the May data show improvement may shape investor sentiment.

Stronger-than-expected results could lift expectations that China’s recent stimulus measures are gaining traction and support equities. If the data remain weak, worries about a slow recovery in domestic demand and a continuing property slump may again pressure sentiment.

Park Shin-young, New York correspondent, Hankyung.com, nyusos@hankyung.com

Park Shin-young, New York correspondent, Hankyung.com, nyusos@hankyung.com