Fed raises rates 0.25%

The Federal Reserve met market anticipations this week raising interest rates by 0.25% taking the fed funds rate to a target range of 5.25% to 5.5%. This comes after the Fed voted to pause rate hikes last month after 10 consecutive rate increases prior.

In the follow-up press conference Fed Chairman Jerome Powell was vague in what the Fed’s next move would be leaving the possibilities open for a pause in rate hikes or a continuation.

The most recent Consumer Price Index for all items rose 0.2% month on month in June and was up 4.8% year on year. The target objective of 2% year on year has still not been achieved but it can be seen on the horizon, hence the noncommitment from Mr. Powell in his press conference as to the question of raising rates going forward.

The stock market avoided any major knee-jerk reactions to the decision or press conference comments with a noticeably less volatile range than what has been seen on prior decision days.

Since the beginning of the year, the Nasdaq has generated a 34% return, the S&P an 18% return and the Dow a 6% return.

Recent discussions in market circles have seen several analysts and big-name firms walking back their bearish predictions from the last year on calling for a recession in 2023. Not all the bears are on board with a shift in sentiment quite yet, but those with the larger faces have been in the process of trying to save them.

Thankfully the price of eggs has come down off its highs recently for those in the cheap seats as they will have plenty of targets no matter the outcome between now and the end of the year.

Crude oil peeks

Sept crude oil futures peeked more than the $80 per barrel mark this week, reaching levels not seen since April and nearing what has been the top of the price range in 2023. Energies have been supported by increased usage and escalating conflict in the Black Sea area. But seasonal tendencies and questions about how OPEC will respond with higher prices loom much larger if prices continue to rise from here.

Have a comment or question? Please reach out to derrick.hermesch@pinion.global.com

Opinions are solely the writer’s. Derrick Hermesch is a commodity futures broker with Pinion. He can be reached at 785-338-9605. This is not a solicitation of any order to buy or sell any market.