Coffee With Greta: Betting On A Pause
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DJIA Futures: -82 (-0.2%)
SPX Futures: +4 (+0.1%)
NASDAQ Futures: +9 (+0.1%)
Good morning friends!
Futures are mixed as traders await the Fed decision this afternoon.
Let’s get right to it!
Fed Day
The Federal Reserve is set to release its rate decision at 2:00 p.m. ET today.
CME Group’s FedWatch Tool currently shows nearly 91% of traders expecting the bank to skip a rate hike today.
That would leave the federal funds rate in a range of 5% to 5.25%.
But there will be a lot of focus on the dot plot to determine if the bank plans one more rate hike this year.
FedWatch shows nearly 58% of traders anticipating a 25bps hike next month.
Fed Chair Jerome Powell will give a post-meeting press conference at 2:00 p.m. ET.
Wholesale Inflation Falls More Than Expected
Wholesale inflation pressures cooled more than expected in May.
The Bureau of Labor Statistics’ producer price index dropped 0.3% monthly and was up just 1.1% year over year.
That was better than economists’ expectations for a 0.1% monthly decline and 1.5% annual increase.
It was the 11th consecutive decline in annual prices and the lowest since December 2020.
The core PPI also came in better than forecast, rising 0.2% monthly and 2.8% year over year.
The PPI is a leading indicator for consumer prices meaning this data is good news for the Fed’s hopes that inflation will continue to cool in the months ahead.
Mortgage Demand Jumps
Mortgage demand jumped last week as rates pulled back for the second week in a row.
The Mortgage Bankers Association reported total application volume rose 7.2% from the previous week.
Purchase applications rose 8% weekly but were 27% lower year over year.
Refinance applications also rose 6% weekly but were 41% lower annually.
The increase in activity came as the average 30-year fixed contract rate fell to 6.77% from 6.81%.
Shell Boosts Dividend
Shell (SHEL) shares are up 2.0% ahead of the open after announcing plans to raise its dividend.
The oil giant announced it will increase its shareholder distributions to 30% to 40% of cash flow from operations.
That’s up from 20% to 30% previously.
The changes include hiking its dividend by 15% from Q2 and at least $5 billion of share buybacks in the second half of this year.
The CEO said, “Performance, discipline, and simplification will be our guiding principles as we allocate capital to enhance shareholder distributions, while enabling the energy transition.”
In Case You Missed It
- Tesla (TSLA) shares rallied 3.6% on Tuesday, extending the company’s record-long win streak. It was the 13th straight session TSLA has closed higher. It was also the highest closing price for the stock since September 2022.