US stock market investors will be closely watching some key events taking place this week. The main focus this week will be on the US core CPI and, then on the FOMC meeting. US CPI data arrives on June 13, while the FOMC meeting is scheduled for June 13–14. On June 14, US Fed chief Jerome Powell will announce whether to maintain the status quo or raise rates. Markets, meanwhile, have already factored in a pause on rate hikes in the FOMC’s June meeting.
Market jitters have risen as a result of unexpected rate hikes by the Reserve Bank of Australia and the Bank of Canada last week. The Bank of Japan is anticipated to hold steady on Friday, while the European Central Bank is anticipated to increase its benchmark rate on Thursday.
Going forward, the markets are expecting a rate hike yet again in July. This anticipation stems largely from Powell’s previous remarks, in which he stated that the Fed will wait to learn the impact of earlier rate hikes.
The fact of the matter is that inflation remains sticky and considerably above the Fed’s desired objective of 2%. The US CPI annual inflation in April, as announced on May 10, was seen at 4.9%, dropping marginally from the 5% level witnessed in March 2023.
Tech stocks, meanwhile, have been the driving force for the markets this year. Technology stocks have continued to rise on speculation that the Federal Reserve is reaching the final stages of its rate hike cycle.
A hawkish pause by the US Fed will signal that the economy is weakening and going into recession. As a final take, investors in the market will take cues from the dot plot of the Economic Projections that will be presented on June 14 and the comments made by Fed Chairman Powell.