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By Alex Eule
| Wednesday, June 23 From
Denial to Acceptance. Interest rate increases
are sounding more and more like a 2022 event. And Federal Reserve policy
makers are doing their best to get investors used to the idea. While the Federal
Open Market Committee was rather vague in its official
rate-making statement last week, individual board members have been
increasingly willing to voice their opinions. Last Friday, St. Louis
president Jim Bullard suggested that rate increases would likely
need to start in 2022. He's a nonvoting member of the
Fed, but his comments still startled markets, sending the Dow down
more than 500 points on Friday. Today, Raphael
Bostic, president of the Federal
Reserve Bank of Atlanta, told reporters basically the same thing: “Given
the upside surprises and recent data points, I’ve pulled forward my
projection for our first move to late 2022,” he said, according
to The Wall Street Journal. This time,
investors shrugged, even though Bostic is a current voting member of the
FOMC, unlike Bullard. The Dow Jones
Industrial Average fell just 71 points, or 0.2%, after two days
of gains. The Nasdaq Composite rose 0.1%, closing at an all-time high for
the second straight day. A 2022 rate
move is increasingly baked into investors' projections. Futures trading
now implies a 41% chance of at least one rate increase by the Fed's July 2022
meeting, according to the CME Group, up from a
28% probability one month ago and just a 12% chance at the start of
the year. The 10-year
Treasury yield rose slightly today, up 1.5 basis points, to
1.49%. Stock
trading was fairly muted. A below-average 9.4 billion shares
traded hands on the New York Stock Exchange and Nasdaq, compared
with a year-to-date average of 12.3 billion. Investors didn't
have much to react to, with earnings reports mostly wrapped up and economic
news fairly quiet. One surprise on the economy front: New-home sales posted a
surprise fall, declining 5.9% from a month ago. One explanation is that home
builders are delaying sales to account for increased buildings costs. "This
is an expected decline due to supply-constraints," Robert
Dietz, the chief economist of the National
Association of Home Builders tweeted
today. My colleague Shaina
Mishkin has more here
on the latest housing data. |
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DJIA:
-0.21% to 33,874.24 The Hot
Stock: Tesla +5.3% Best Sector:
Consumer Discretionary +0.8% |
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