All eyes will be on the minutes of the last Federal Open Market Committee (FOMC) meeting, which will be released today. The last FOMC meeting was held on April 28-29, and the minutes of the meeting will be released at 2 pm ET on Wednesday, May 20.
Two things will stand out. One, markets want to see how hawkish committee members were, especially after April’s higher-than-expected inflation reading. And, secondly, the mood of members on inflation and the rate path under the new incoming chair.
Powell had presided over the April 28-29 meeting as US Fed chair. Currently, Kevin Warsh has officially taken over as Fed Chair since May 15. With a regime change underway, markets will be watching intently for signals of where voting FOMC members stand on inflation and jobs.
For now, investors’ attention has switched to the minutes of Powell’s final FOMC meeting. What makes the April FOMC meeting minutes significant is that they represent one of the last chapters of the Jerome Powell era.
Warsh’s first goal could be to meet President Trump’s desire to cut interest rates aggressively. Markets perceive Warsh as more willing to cut rates than Powell, but stubborn inflation restricts his flexibility in the second half of 2026.
However, in an exclusive to The Washington Examiner, President Donald Trump expressed trust in incoming Federal Reserve Chairman Kevin Warsh, saying he will delegate interest rate decisions to him. Washington Examiner spoke to Trump during a Tuesday morning phone call and pointed out that investors are now pegging a higher chance of an interest rate hike rather than a cut by the end of the year, and asked him whether he thinks Warsh will deliver a cut.
“I’m going to let him do what he wants to do,” Trump responded. “He’s a very talented guy, he’s going to be fine, he’s going to do a good job.”
Meanwhile, the macro backdrop has shifted dramatically, and the tables have turned since the start of the Iran war. Amid rising inflation concerns, the Federal Reserve is unlikely to implement another rate cut this year. From projections of at least 2 rate cuts in 2026, the market is now expecting a rate hike later in the year if bond yields do not cool off.
The Iran conflict persists, maintaining oil prices at around $110, approximately 40% above pre-war levels. The impact of US tariffs and rising oil costs is evident in elevated prices for goods and services, with US CPI and PPI data for April significantly surpassing expectations. Recent labor data and a US Consumer Price Index (CPI) rise to a three-year high of 3.8% emphasize the influence of elevated fuel prices on overall price growth. The Producer Price Index (PPI) also saw a significant 6% rise, marking the largest increase since 2022, indicating a challenging path for potential rate reductions.
“Investors will monitor Fed minutes and comments from policymakers for clues on whether the central bank may gradually shift away from an easing bias. The combination of persistent inflation risks, elevated oil prices, and rising yields could challenge the bullish momentum that has carried equities toward recent highs and could fuel additional corrections,” says Paolo Broccardo, CEO at BankPro.
Beyond the FOMC meeting minutes, investors will be focused on a crowded earnings calendar, the release of major global economic indicators, and continuing macro threats posed by high crude oil prices, a strengthening dollar, and rising US bond yields. NVIDIA is releasing its earnings later in the day, after the market closes.
Prices of gold and silver will also be impacted by the tone of the members, as per the minutes of the meeting. “FOMC Meeting Minutes can move gold sharply if they signal patience, caution, or concern over sticky price pressure. A hawkish tone supports the dollar and caps gold; a softer tone supports gold through lower-yield expectations,” said Naeem Aslam, CIO at Zaye Capital Markets.
On Wall Street, the US stock market is currently at record highs, with the S&P 500 and Nasdaq Composite reaching all-time peaks — up 7.4% and 11% respectively since the start of the year. The Dow Jones Industrial Average has also surpassed 50,000 for the first time, reflecting a 3% year-to-date increase.
One of the biggest risks for equity markets currently is surging bond yields. Bond investors are asking for a higher premium and dumping their bond holdings, pushing yields higher. The 10-year yield rose to 4.68%, while the 30-year yield rose to 5.2%, hitting its highest level since July 2007.
The next FOMC meeting, chaired by Kevin Warsh as the new Fed chief, will be held on June 16-17 and will be accompanied by the release of the Fed’s ‘dot plot’. How FOMC members perceive rates in the months ahead — amidst rising inflation — will be interesting to watch. Separately, don’t rule out the possibility of new monetary easing measures by the Fed if a direct rate cut does not appear feasible.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as investment advice. The views and opinions expressed by experts are their own and do not necessarily reflect the editorial position of this publication. Readers are advised to consult a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.