In case you haven’t heard(lol) Israel and Iran are in a fit of sorts over Iran’s nuclear program. Many people have been tuned into as many live updates as possible and watching videos of the missile salvos launched by both sides. Traders have rightfully been focused on the war trade which should continue to be in focus as long as tensions are high. The market has obviously been focused on this issue as oil prices $USO ( ▼ 0.04% ) have climbed as high as 20 percent on this move. Weirdly enough $ES_F ( 0.0% ) futures are only 2.5 percent off of all time highs after the tariff pull back.
However, the markets are not devoid of additional catalysts. We will be getting a fed rate decision on 18 June. President Trump has certainly been vocal on his wishes for rate cuts sooner rather than later. This has not influenced Fed Chair Jerome Powell to act on interest rates to this point. As of today most of the market is projecting a cut in September according to estimates. This should line up nicely as it stands with what effects tariffs will have on US trade and markets in general.
The interest rate decision will be announced at 2 p.m. est with the press conference 2:30 p.m. est. This is when Chairman Powell steps to the podium and reads a prepared statement. The most exciting part of the afternoon is the question and answer portion. When reporters ask questions and try to get Chairman Powell to telegraph his personal intuition as to what actions the Fed is most likely to take with regard to interest rates. He’s always been very good at hiding behind bland language, however, the market will hinge on every word he says. and it is always entertaining to see the markets dance back and forth with each statement. There no way to predict how markets will react or if they will reach as strongly as before due to so many competing catalysts.
After the event it is always a good idea to go back and look at the CME watch tool and see where participants(federal reserve voting members) are in terms of where they see interest rates and note any changes from the previous quarter. Last but not least better keep an eye out for a Trump truth about Powell those are always entertaining.
