The focus today will be the Federal Open Market Committee

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Published Date 7/26/2023

This afternoon the FOMC will increase the FF rate by 25 bps taking it to a range of 5.25%/5.50%. The question that hangs over markets going into this afternoon’s meeting and Powell’s press conference is what it will mean going forward, will Powell squash the growing belief the Fed is finished, or continue his drive to push inflation to 2.0% which would mean more increases. The view that the end is in sight has increased over the last month, even some conjecturing the Fed may begin lowering rates by the end of this year. A Bloomberg survey done earlier this month suggests the first cut in rates will be March next year.

The survey questioning a recession suggests economists believe a recession will occur. Economists inching to a more optimistic outlook. The July survey 58% is down from 67% in an April survey.

At 9:30 am the DJIA opened -93, NASDAQ -3, S&P -6. 10 year 3.86% -3 bp. FNMA 6.0 30 year coupon at 9:30 am +10 bps from yesterday and +24 bps from 9:30 am yesterday.

At 10 am June new home sales expected at 727K were lower at 697K and May revised from 763K to 715K.

Weekly MBA mortgage applications declined last week with mortgage rates higher. The composite -1.8% with purchase apps down 2.5% and re-finances -0.4%.

Over night the IMF increased its global growth from 2.8% to 3.0%. The Bank of Japan will abandon its yield curve control policy with an announcement potentially coming as early as this Friday. Tomorrow the ECB is expected to announce a 25-bps rate hike tomorrow.

Source: TBWS

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