US stock index futures were modestly higher early Wednesday following yesterday’s pullback. Investors remain focused on this evening’s Federal Reserve interest rate decision, with markets expecting rates to remain unchanged at 4.25%–4.5%.
But it’s possible that there could be a few FOMC dissenters, as Christopher Waller and Michelle Bowman have both indicated that they favour a 25-basis point cut now, rather than waiting until September. Perhaps of greater interest will be Fed Chair Jerome Powell’s subsequent press conference.
The chances are that he will have to fend off questions over President Trump’s relentless personal attacks, and the chances of him leaving before his official departure in May next year. Otherwise, analysts will be desperate for any clues into the Fed’s outlook on rate cuts for the rest of this year, and how inflation and the labour market play into the current thinking.
Market participants are also dealing with the uncertainty following the US-China trade talks which concluded yesterday. Negotiations ended without a clear extension of the current tariff truce which is set to expire on August 12th. Any delay will ultimately require President Trump’s sign-off.
Meanwhile, the VIX remained steady in early trade this morning. Yesterday’s rare, but modest, sell-off across US stock indices hardly moved the needle as far as stock market volatility was concerned. Investor sentiment appears relatively resilient.
Source: TN Trader
But with the Federal Reserve decision, Advance GDP data and key earnings still all to come, volatility could rise if surprises materialise. If not, then the VIX looks like it could continue to drift in listless summer trade.
