Following May’s employment report, which indicated job gains well in excess of consensus forecasts, Federal Reserve (Fed) policymakers will be looking for better news on the inflation front this week. Tuesday will see the release of the Consumer Price Index, while Wednesday will reveal the new Producer Price Index, prior to the Fed announcing another interest-rate decision later that day.1
Recent communication from numerous Fed officials suggests a pause in rate hikes is the most likely outcome during this week’s meeting. The Fed seems intent on allowing the often-cited “long and variable lags” of its rapid monetary tightening to flow through the economy before increasing rates again. Chair Jerome Powell’s press conference will be watched closely for clues on just how long the likely pause may remain in place.
The S&P 500 Index entered bull-market territory last week, up more than 20% from the lows last October.2 Further gains in the equity markets will likely require continued improvement on inflation and a more certain end to the current Fed tightening cycle.
1MarketWatch – U.S. Economic Calendar; as of 6/12/2023
2Yahoo! Finance – The S&P 500 has entered a bull market. Here's what history says will happen next; 6/10/2023
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