The Market News Today: Bracing for Major Impact from CPI Data, Fed Decisions

CPI Report Expected to Show Mild Inflation Increase in May

The May Consumer Price Index (CPI) is projected to rise by 0.1% month-over-month and 3.4% annually, with core CPI expected to gain 0.3% monthly and 3.5% annually. These figures are similar to April’s, indicating inflation remains above the Fed’s 2% target. Despite this, some metrics suggest a positive trend. However, the Fed prioritizes the personal consumption expenditures (PCE) index over CPI. The CPI report will be released on Wednesday at 12:30 GMT.

Fed to Hold Rates Steady, Market Awaits Economic Projections

During the Fed meeting, officials will maintain the benchmark rate between 5.25%-5.50%, while releasing updated economic projections influenced by the CPI report. The informal consensus suggests the Fed’s “dot plot” may indicate fewer rate cuts in 2024. Market observers expect the Fed to reduce GDP growth outlook and raise inflation projections. Chair Jerome Powell’s post-meeting conference will be closely watched for insights on future policy actions amid evolving economic conditions.

IEA: US Oil Surge to Outpace Demand, Impacting OPEC+ Strategies

The International Energy Agency (IEA) forecasts that U.S.-led global oil production will outstrip demand growth until 2030, potentially disrupting OPEC+ market management. Oil production capacity is expected to reach nearly 114 million barrels per day by 2030, creating unprecedented spare capacity. IEA Executive Director Fatih Birol warned Big Oil to align business strategies with these changes. The report also highlighted that while global oil demand will peak at 106 million barrels per day by 2030, demand in advanced economies will decline.

Indexes Rise Ahead of Fed Decision and CPI Report; Apple and Oracle Lead Gains

Stock futures rose as investors anticipated the Federal Reserve’s rate decision and May’s CPI report. The S&P 500 and Nasdaq reached new highs on Tuesday, fueled by Apple’s AI announcement at its developer conference. Oracle shares surged 9% in extended trading, boosted by new cloud deals with Google and OpenAI. Investors are closely watching the Fed’s policy updates and Chair Jerome Powell’s comments for future rate directions. The CPI report is expected to show a mild increase in inflation.

Fed Meeting and CPI Report to Impact Market Yields

Wednesday is crucial for the U.S. economy, with the Federal Reserve’s interest rate decision and the CPI report set to influence market yields. While the Fed is expected to keep rates unchanged, investors will scrutinize the central bank’s guidance and post-meeting press conference for future rate hike clues. The release of the Fed’s quarterly economic projections will provide insights into policymakers’ expectations for the economy and potential interest rate cuts this year.