The focus today is the FOMC meeting and the post-meeting press conference. Wall Street soared as weaker than expected inflation data should give the Fed more room to further stimulus. The DJIA and the S&P 500 indices rose +0.91% and +0.78% respectively. ECB President Draghi stated that the central bank is open-minded on non-standard measures. In the commodity sector, the front-month contract for WTI crude oil price added +0.69% while the Brent crude contract gained +0.52%. Gold slipped further with the benchmark Comex contract dropped to as low as 1360.2, a level not seen on May 23, before ending the day at 1366.9, down -1.17%.
Fed Chairman Ben Bernanke signaled at the Congress' Joint Economic Committee in May that the central bank "could take a step down in the next two meetings" if economic data warrants. His comments resulted in turbulent market reaction although later watered down by other policymakers. The key economic data the Fed is watching are mostly employment and inflation. The May's employment report showed that US payrolls increased +175K, up from the addition of +149K in the prior month. The jobless rate climbed modestly higher to 7.6%. Inflation has remained benign. Headline CPI in May rose +0.1%, following 2 consecutive months of contraction in April and March. On annual basis, inflation rose +1.4% from +1.1% in April. Core CPI stayed unchanged at +1.7% during the month. The Fed would only consider tapering when the number of payrolls reaches an average monthly rate of at least 175K while core inflation stopped moderating further.
Fed Chairman Ben Bernanke signaled at the Congress' Joint Economic Committee in May that the central bank "could take a step down in the next two meetings" if economic data warrants. His comments resulted in turbulent market reaction although later watered down by other policymakers. The key economic data the Fed is watching are mostly employment and inflation. The May's employment report showed that US payrolls increased +175K, up from the addition of +149K in the prior month. The jobless rate climbed modestly higher to 7.6%. Inflation has remained benign. Headline CPI in May rose +0.1%, following 2 consecutive months of contraction in April and March. On annual basis, inflation rose +1.4% from +1.1% in April. Core CPI stayed unchanged at +1.7% during the month. The Fed would only consider tapering when the number of payrolls reaches an average monthly rate of at least 175K while core inflation stopped moderating further.
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