IBD/TIPP Economic Optimism Index Misses Expectations, SP500 Tests Session Highs

Key Insights

• IBD/TIPP Economic Optimism Index grew from 41.6 in May to 41.7 in June. 
• SP500 made an attempt to settle above 4280 as traders bet on a more dovish Fed. 
• U.S. Dollar Index gained ground amid rising Treasury yields. 

On June 6, traders had a chance to take a look at the IBD/TIPP Economic Optimism Index report for June. The report indicated that IBD/TIPP Economic Optimism Index increased from 41.6 in May to 41.7 in June, compared to analyst consensus of 45.2.

The Index is one of the consumer confidence measures which are published on a monthly basis. Numbers below 50 indicate pessimism. The Index has been in the negative territory for 22 months in a row.

The FedWatch Tool indicates that there is a 75.9% probability that Fed will leave the federal funds rate unchanged at the next meeting in June. Traders expect that the federal funds rate would be raised by 25 bps in July. These expectations have been mostly stable in recent days, and it remains to be seen whether the IBD/TIPP Economic Optimism Index will change the market’s expectations.

Meanwhile, Treasury yields are moving higher. The debt ceiling was raised so the U.S. will issue more debt, which is bullish for yields.

U.S. Dollar Index moved towards the 104.30 level as traders focused on rising Treasury yields.

Strong dollar and higher yields put some pressure on gold markets, although gold remained mostly unchanged at $1960.

SP500 moved towards the 4280 level after the release of the report. Stock traders look ready to bet on a more dovish Fed, which is bullish for stocks.

For a look at all of today’s economic events, check out our economic calendar.