New York Stock Market... FOMC Regular Meeting, Rate Freeze Highly Likely

This week, Wall Street in the United States is expected to focus on the military conflict between Israel and Iran and the outcome of the Federal Open Market Committee (FOMC) meeting.

The FOMC regular meeting of the U.S. central bank (Fed) could also influence stock prices. At the meeting held on the 17th and 18th, market opinion overwhelmingly expects the Fed to keep the federal funds rate unchanged. Attention is focused on the remarks to be made by Jerome Powell, Chairman of the Fed, at the press conference on the 18th, as well as the Summary of Economic Projections (SEP) released each quarter. The SEP contains the interest rate path projected by FOMC members. Investors expect Powell to reiterate at the press conference that decisions will be “data-dependent.”

According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the federal funds futures market expects the Fed to keep rates unchanged in July and then cut rates by 0.25 percentage points twice from September onward. If Powell expresses a more dovish stance than before, expectations of a rate cut could become a driving force for stock market strength. John Belton, portfolio manager at Gabelli Funds, commented, “The key issue is how the Fed evaluates the recent mild inflation and weakened employment data,” adding, “This, in my view, provides grounds for cutting rates twice within the year.” On the other hand, those who believe there will be fewer than two rate cuts in the second half evaluate that Donald Trump's tax cut bill could hinder the process.

On the 17th, U.S. May retail sales data will be released. The 19th is a market holiday in observance of Juneteenth National Independence Day.

Reporter Han Kyungjae hankyung@hankyung.com