Stock Index Futures Gain as Investors Await Fed Rate Decision, Middle East in Focus
Investors also await updates on whether the U.S. plans to become directly involved in the conflict in the Middle East. The conflict between Israel and Iran entered a sixth day on Wednesday, showing no signs of easing. U.S. President Donald Trump demanded Iran's unconditional surrender on Tuesday and threatened a potential strike against the country's leader.
In yesterday's trading session, Wall Street's main stock indexes closed lower. Solar stocks cratered after Senate Republicans outlined revisions to President Trump's tax-and-spending bill that would phase out solar, wind, and energy tax credits by 2028, with Sunrun (RUN) plummeting over -40%, and Enphase Energy (ENPH) tumbling more than -23% to lead losers in the S&P 500. Also, Lennar (LEN) slumped over -4% after the homebuilder posted weaker-than-expected FQ2 adjusted EPS. In addition, T-Mobile US (TMUS) slid over -4% after Bloomberg reported that shareholder SoftBank Group sold 21.5 million shares of the wireless network operator to finance its AI initiatives. On the bullish side, Jabil Circuit (JBL) climbed more than +8% and was the top percentage gainer on the S&P 500 after the supplier of electronic parts posted upbeat FQ3 results and raised its full-year revenue guidance.
Economic data released on Tuesday showed that U.S. retail sales slumped -0.9% m/m in May, weaker than expectations of -0.5% m/m, while core retail sales, which exclude motor vehicles and parts, unexpectedly fell -0.3% m/m, weaker than expectations of +0.2% m/m. Also, U.S. May industrial production fell -0.2% m/m, weaker than expectations of no change m/m, while manufacturing production rose +0.1% m/m, in line with expectations. In addition, the U.S. import price index was unchanged m/m in May, stronger than expectations of -0.2% m/m.
'Investors should still expect some volatility in economic data due to lingering effects of trade policy. The economy and the consumer are holding up for now, but there are signs of vulnerability. That could present risks in the second half of the year — particularly if we see a further slowdown in jobs or spending,' said Bret Kenwell at eToro.
Today, all eyes are focused on the Federal Reserve's monetary policy decision later in the day. The Federal Open Market Committee is widely expected to keep the Fed funds rate unchanged in a range of 4.25% to 4.50%. Market watchers will follow Chair Jerome Powell's post-policy meeting press conference for hints on what could ultimately prompt the central bank to make a move on interest rates and when that might happen. The Fed's quarterly 'dot plot' in its Summary of Economic Projections, which shows FOMC members' forecasts regarding the path of interest rates, will also be closely watched. Economists expect the Fed's rate forecasts to remain largely unchanged – two cuts this year, followed by additional policy rate reductions in 2026.
A survey conducted by 22V Research revealed that the current tariff environment would lead to 25 basis points of cuts this year. 'Investors believe that if the dot plot stays at two cuts, it will be because the inflation forecast doesn't move up,' said Dennis DeBusschere, founder of 22V.
On the economic data front, investors will focus on U.S. Initial Jobless Claims data, which is set to be released in a couple of hours. Economists expect this figure to be 246K, compared to last week's number of 248K.
U.S. Building Permits (preliminary) and Housing Starts data will also be reported today. Economists forecast May Building Permits at 1.420M and Housing Starts at 1.350M, compared to the prior figures of 1.422M and 1.361M, respectively.
U.S. Crude Oil Inventories data will be released today as well. Economists foresee this figure standing at -2.300M, compared to last week's value of -3.644M.
Meanwhile, the U.S. stock markets will be closed tomorrow in observance of the Juneteenth federal holiday. The markets will reopen on Friday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.385%, down -0.11%.
The Euro Stoxx 50 Index is down -0.02% this morning as investors digest regional inflation data and look ahead to the Fed's interest rate decision. Investors also continued to monitor the conflict between Israel and Iran, which entered its sixth day, with concerns intensifying about more direct U.S. involvement in the conflict. Healthcare stocks lost ground on Wednesday, while defense and bank stocks outperformed. Final data from Eurostat confirmed on Wednesday that the Eurozone's annual inflation rate eased to 1.9% in May from 2.2% in April, falling below the European Central Bank's target for the first time since September 2024. Separately, data showed that U.K. inflation eased slightly in May but remained well above the Bank of England's target, making it unlikely to influence BOE rate setters. Meanwhile, Sweden's central bank lowered its key policy rate by 25 basis points to 2.00% on Wednesday and noted there was a slight possibility of additional easing later this year if economic weakness continues and inflation declines further. Investor focus now turns to the BOE's monetary policy decision on Thursday, with the central bank widely expected to leave its key interest rate unchanged at 4.25%. In corporate news, Airbus SE (AIR.P.DX) rose over +2% after the planemaker lifted the upper end of its dividend payout target ahead of a business update.
European Central Bank Governing Council member Fabio Panetta said on Wednesday that the central bank would maintain a flexible approach to monetary policy decisions amid a backdrop where the conflict between Israel and Iran adds to the risks posed by Washington's trade policy.
U.K.'s CPI, U.K.'s Core CPI, Eurozone's CPI, and Eurozone's Core CPI data were released today.
U.K. May CPI has been reported at +0.2% m/m and +3.4% y/y, compared to expectations of +0.2% m/m and +3.3% y/y.
U.K. May Core CPI came in at +0.2% m/m and +3.5% y/y, in line with expectations.
Eurozone May CPI arrived at unchanged m/m and +1.9% y/y, in line with expectations.
Eurozone May Core CPI stood at unchanged m/m and +2.3% y/y, in line with expectations.
Asian stock markets today closed in the green. China's Shanghai Composite Index (SHCOMP) closed up +0.04%, and Japan's Nikkei 225 Stock Index (NIK) closed up +0.90%.
China's Shanghai Composite Index closed just above the flatline today as investors were underwhelmed by the opening of the annual Lujiazui Forum, which offered few new policy signals. Sentiment also remained cautious as Israel and Iran exchanged new missile strikes, extending their conflict into a sixth consecutive day. Technology stocks advanced on Wednesday after China's securities regulator unveiled plans to establish a new segment on Shanghai's tech-focused STAR market aimed at hosting pre-profit growth firms and supporting innovation. The watchdog also said that China will promote the development of science and technology bonds to foster innovation. Also, Li Yunze, the head of China's financial regulator, said that China's financial opening and expanding consumer market benefit the nation and provide improved asset allocation opportunities for global investors. Meanwhile, the country's foreign exchange regulator pledged to maintain stability in the yuan exchange rate and guard against external shocks and risks. With few policy surprises emerging from the forum, investors now turn their attention to the upcoming July Politburo meeting for clearer guidance on economic support. In other news, state media Securities Times reported on Wednesday that China will distribute the remainder of its consumer goods trade-in funds in an orderly manner, and the central government is currently directing local governments to utilize the funds at a steady pace. In corporate news, Li Auto slid over -4% in Hong Kong after Chinese media reported that Meituan founder Wang Xing, a major shareholder in the EV maker, further reduced his stake in the company.
Japan's Nikkei 225 Stock Index closed higher today, hitting its highest level in four months. Video game and brokerage stocks led the gains on Wednesday. However, the benchmark index's gains were limited by geopolitical tensions, as investors grew increasingly concerned about the prospect of a more direct U.S. military involvement in the Middle East. Meanwhile, investors also digested a slew of weak economic data from the country that reinforced expectations that the impact of U.S. President Trump's tariffs could limit the Bank of Japan's ability to raise rates. Data from the Ministry of Finance released on Wednesday showed that Japan's exports fell in May for the first time in eight months as major automakers like Toyota were impacted by sweeping U.S. tariffs. Also, Japan's imports dropped in May at the sharpest pace since January 2024. In another sign of waning demand and sentiment potentially linked to the uncertainty, separate data showed that Japan's monthly core machinery orders tumbled in April, marking the weakest reading since April 2020. The data came a day after the BOJ held its policy rate steady amid trade uncertainty, and Governor Kazuo Ueda delivered cautious remarks about the outlook, further delaying expectations for the next rate hike. It remains unclear whether Japan's efforts to secure an exemption from higher U.S. tariffs will succeed. Japanese Prime Minister Shigeru Ishiba said on Tuesday that his country has yet to reach a comprehensive tariff agreement with the U.S., as some disagreements between the two nations remain. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +1.10% to 24.91.
The Japanese May Trade Balance came in at -637.6B yen, stronger than expectations of -893.0B yen.
The Japanese May Exports arrived at -1.7% y/y, stronger than expectations of -3.8% y/y.
The Japanese May Imports stood at -7.7% y/y, weaker than expectations of -6.7% y/y.
The Japanese April Core Machinery Orders came in at -9.1% m/m and +6.6% y/y, stronger than expectations of -9.3% m/m and +4.0% y/y.
Pre-Market U.S. Stock Movers
Circle Internet Group (CRCL) gained more than +3% in pre-market trading after the Senate passed the Genius Act, legislation aimed at regulating stablecoins.
Hasbro (HAS) rose nearly +1% in pre-market trading after the Wall Street Journal reported that the toy maker had cut about 3% of its global workforce.
La-Z-Boy (LZB) fell over -1% in pre-market trading after the furniture maker posted weaker-than-expected FQ4 adjusted EPS and issued soft FQ1 revenue guidance.
You can see more pre-market stock movers here
Today's U.S. Earnings Spotlight: Wednesday - June 18th
Korn Ferry (KFY), GMS (GMS), Smith & Wesson (SWBI), Aurora Cannabis (ACB), Euroseas (ESEA).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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Los Angeles Times
a minute ago
- Los Angeles Times
Trump set to make final call on China tariff truce extension
US President Donald Trump is set to make the final call on maintaining a tariff truce with China before it expires in two weeks, an extension that would mark a continued stabilization in ties between the world's two biggest economies. The two sides agreed to extend their tariff truce, Chinese trade negotiator Li Chenggang told reporters in Stockholm without providing further details. Treasury Secretary Scott Bessent, who led the US delegation with Trade Representative Jamieson Greer, later said 'our Chinese counterparts have jumped the gun a little.' Asked on CNBC whether he'd recommend an extension of the pause, Bessent said he'd give Trump the facts, 'then he'll decide.' There's still 'a couple of technical details to work out,' Bessent told reporters Tuesday after two days of meetings with officials from Beijing led by Vice Premier He Lifeng. The Stockholm negotiations marked the third round of US-China trade talks in less than three months. They wrapped up ahead of an Aug. 12 deadline to resolve differences during a 90-day suspension of sky-high tariffs that had threatened to cut off bilateral trade. Adding an extra 90 days is one option, Bessent said. 'While there is disappointment that nothing material was agreed, the mood seems to be constructive and optimistic about future potential deals,' Kelvin Lam, senior China economist at Pantheon Macroeconomics in London, said in an initial assessment. Asian shares were mixed in early trade on Wednesday. The S&P 500 snapped a six-day rally. A 90-day extension would clear the path for Trump to visit China to meet with President Xi Jinping in late October, around the time of an international meeting in South Korea that the US leader is likely to attend. Speaking to reporters on Air Force One, Trump said he may meet with Xi before the end of the year. Trump also said he heard from Bessent that the talks with China went well. Trump-Xi Summit? Both sides have been taking steps to turn down the temperature and reduce flashpoints recently, with Chinese exports of rare earth magnets starting to recover in June and the US saying it would approve shipments of a semiconductor used for artificial intelligence which it had blocked. This week, the US also declined to allow Taiwanese President Lai Ching-te to transit through the US, removing a potential thorn in ties with the mainland, which claims Taiwan as its own territory. 'All of these moves are setting the stage for what I predict will be a summit between Trump and Xi before Thanksgiving,' Harvard professor Graham Allison said on X. Allison last month met with China's foreign minister and the party secretary of Shanghai, who is a member of the Politburo. The Stockholm round came on the heels of the Trump administration reaching preliminary tariff deals with Japan and the European Union. Bessent said his Chinese counterparts were in 'more of a mood for a wide-ranging discussion.' The US treasury chief told CNBC that the Chinese side came to talks with a delegation of 75 people, versus the 15-strong team fielded by Washington. 'We start out in a very large room, probably 12 or 15 on each side of the table,' he said. The 'real work gets' done when delegates 'break down into smaller groups of two-on-two,' he added. Unlike at the previous talks in London, the US team this time around didn't include Commerce Secretary Howard Lutnick, who oversees Washington's export control regime. With the outlook for tariffs looking less dire than in April, the International Monetary Fund this week raised its forecasts for global growth this year. The truce has also helped China's economy, with the IMF boosting its 2025 outlook for the country to 4.8%, noting the lower levies and stronger-than-expected activity in the first half. At issue in the ongoing dialogue is how the two countries seek to maintain a stable trading relationship while applying barriers like tariffs and export controls to limit each other's progress in critical sectors ranging from battery technology and defense to semiconductors. Greer said the US wants assurances that critical materials like magnets keep flowing so the two sides can focus on other priorities. 'We don't ever want to talk about magnets again,' he said. Greer said the resumption of China's rare earths exports is Beijing's biggest concession so far. Asked if the US made any commitments to China on its pending 232 investigations, Greer said China asked for status updates on them, but stressed that the eventual duties would be applied globally and not have any exemptions for particular countries. Reducing the 20% tariffs that Trump imposed over US claims that Chinese companies supply chemicals used to make the illegal drug fentanyl is also a high priority for Beijing, Eurasia Group analysts wrote in a note last week. In the background of the latest trade talks between Washington and Beijing is the race by several economies to sign tariff deals with Trump before Aug. 1, when he's threatening to impose so-called reciprocal import taxes on the US's major trading partners. Leonard , Tam and Duxbury write for Bloomberg.
Chicago Tribune
a minute ago
- Chicago Tribune
Tariffs are driving up the cost of saying ‘I do'
As engaged couples plan their dream weddings this summer, an unforeseen economic force is increasingly impacting their decisions and budgets: the intricate and fluctuating world of global trade. President Donald Trump's tariffs — and the accompanying rate changes, moratoriums and trade deals — are translating into higher costs for traditional wedding components, from floral arrangements to designer gowns and even the celebratory spirits that toast a new union. Small business owners like Brandi Kenison at Lee Floral Design, a small Livonia, Michigan-based floral company that mostly supplies arrangements for luxury weddings, say this year's peak nuptials season has been more financially challenging than the COVID-19 pandemic, when curbs on indoor gatherings crippled many businesses. 'Obviously, during COVID, that made sense. (Now) it's very hard to put into words,' Kenison said. 'Will it (a new tariff) go through? How much will it go through? … It's really difficult for us to be transparent with our clients because we truly don't know. 'What's even harder is when prices on our end jump 25%, but we're contractually only able to raise the price by 10%. That means we absorb the difference, which quickly eats into our margins,' she said. 'It's definitely been a struggle.' According to the U.S. Department of Agriculture, 80% of all cut flowers sold in the United States are imported, with the primary sources being South American countries, notably Colombia and Ecuador. With current tariffs of 10% on Colombia and 15% on Ecuador, wholesalers, florists and ultimately, engaged couples face higher costs. 'When tariffs are placed on these imports, it inevitably drives up costs — not just for wholesalers and florists, but ultimately for the customer as well,' Kenison said. 'And it's not limited to just flowers. A lot of our day-to-day supplies, like vases, candles, and other staples, are sourced from countries like China, which means those items are also affected by tariffs, further increasing our overall expenses.' Wedding planners say brides are also experiencing higher prices for dresses and facing shipping delays. Meagan McPhail, owner of Mitten Weddings, said in an email that 'prices are up and timelines are longer' for dresses due to rising fabric costs. About 12.2 million wedding gowns are produced each year in China, and 70% of them are exported, according to Deep Wear. 'Even some U.S. designers still source their fabrics internationally, so it all adds up,' McPhail said. Tariffs are adding to already pricey wedding costs that average $300 to $600 per person, according to wedding planners Emma and Rebecca Targett of Meriwether Social. The Ann Arbor, Michigan-based mother-daughter duo planned Sophie Partington and Nicholas Kuchar's Aug. 2 wedding at the Michigan League Ballroom. 'Now, more than ever, that conversation is a part of our everyday planning process with clients,' Emma Targett said. 'Things just cost more right now: food, floral, specifically. Anything that's really commodity-based like that, things that are very supply chain dependent. 'So much of our day-to-day now is explaining to clients that food costs more so these catering bills are higher, a lot of times venue minimums have gone up because they have to account for their increased food cost as well,' she said. According to a survey conducted by The Knot of 741 engaged couples planning 2025 or 2026 wedding receptions, over half of the couples, or 53%, reported that tariffs had already impacted decisions about their celebrations. The survey also found that instead of reducing their overall budget, many couples are hiring professionals to navigate cost challenges, including booking well ahead of time to avoid paying more. Take couple Lydia Karpack, 23, of Plymouth and Alex Winnie, 24, of Belleville, Michigan, who will tie the knot at Detroit's Book Tower on Aug. 30. The high school sweethearts got engaged in downtown Plymouth in May 2024 and sought out Meriwether Social to plan their downtown Detroit wedding that is expected to include 145 guests and cost over $75,000. 'There's definitely things that you see that number that a vendor gives you, it's a big number, you're a little shocked about it. Weddings are becoming such this big thing,' Karpack said. 'You really have to evaluate what you really want to splurge on and what's going to be worth it and what you can find alternative ways to get the same look you're going for. It's about balance.' Since Karpack had the venue, photographer and DJ booked in early 2025, she effectively sidestepped some of the tariff-related price increases from vendors. Still, she was sticker-shocked by the prices of hydrangeas and tulips. 'A lot of florists have minimums. You have to start out at $5,000 or $10,000 for flowers and that doesn't include tax or the design fee,' she said. 'It's like that number, I think, scares people. It's a lot of money to spend on flowers. That was something we realized, 'let's find a different solution here and scale back a bit.'' She said 'no' to a huge arched floral wall but yes to the dress and veil she would wear from Magnolia Laine Bridal – Detroit. Cost for those: More than $3,000. 'My veil was pretty expensive,' Karpack said. 'I had no idea how much veils cost — for a couple yards of fabric, it's like $600. I was very shocked about that. I was going to do an Etsy veil for like $100, but matching the color up to a dress and you're looking at the color on a screen … it just gets way too stressful.' Karpack said trimming the flower budget helped the couple afford their preferred reception site, the Book Tower. 'That was something we really wanted to splurge on and then find other ways to save around,' she said, 'so that we could still have the venue that we wanted.'
CNBC
2 minutes ago
- CNBC
The big opportunity in these tax-free bonds may be short lived — 'the ship is leaving the port,' says strategist
The opportunity to scoop up municipal bonds at attractive prices isn't going to last forever, according to strategist Tom Kozlik. The head of public policy and municipal strategy at Hilltop Securities has been warning investors that a " window of opportunity " may close fast once the idea that the Federal Reserve is destined to cut interest rates gains in popularity. Now, he's seeing signs that may have started. "The ship is leaving the port, and investors should stay alert to avoid missing this opportunity," Kozlik wrote in a note last week. Yields on municipal securities declined recently, reinforcing this view, the strategist noted. July's disappointing jobs report , showing signs of a potential slowdown , further strengthened the argument. Bond yields move inversely to prices. Plus, recent economic data, Traders now see a about an 86% chance of a September rate cut by the Federal Reserve, according to the CME FedWatch tool , which uses 30-Day fed funds futures prices to determine the odds. "A combination of either the market and/or the Fed could cause yields to drop, further closing that window of opportunity," Kozlik said in an interview with CNBC. The average municipal bond yielded 3.9% late last week, down from 4% the week before, helped by a rally in the Treasury market, said Cooper Howard, fixed-income strategist at Schwab Center for Financial Research. For instance, the Schwab Municipal Bond ETF recently had a 30-day SEC yield of 3.78% and a 0.03% expense ratio. SCMB YTD mountain Schwab Municipal Bond ETF year to date Those yields are before taxes are taken into consideration. Interest earned from muni bonds is free from federal tax and, if the bond holder lives in the state where the bond is issued, exempt from state and any local tax too. For investors in the top tax bracket, the tax-equivalent yield is around 6.5%, Howard said. In addition, municipal bond yields are even more attractive on a relative basis when compared to Treasury yields, especially at the longer end of the yield curve, he noted. The municipal-to-Treasury ratio for 10-year bonds is about 75%, meaning munis yield about 75% of what similar Treasury bonds yield. While Treasurys are free of state taxes, they are not exempt from federal taxes. "The longer portion of the yield curve, if you're an investor who can stomach a little bit of interest-rate risk, we think that that can make sense," Howard said. Yet that relative value can soon come down as well, Kozlik said. Over the last couple weeks, cross-over —or nontraditional — buyers have been investing in municipal bonds, he said. "Those non-traditional and non-regular buyers have been pretty active, and when those non-traditional buyers jump in, that's one of the things that oftentimes brings down that relative value," he explained. The municipal-to-Treasury ratio hasn't fallen quickly because there has been heavy primary issuance, he said. "So on the one hand, that means that the opportunity for municipal-to-Treasury ratios being very attractive could continue for a couple of days — but I'm saying days, I'm not saying weeks," Kozlik said. "So this is something that when individual investors see this, they can't wait." Where to find opportunity Kozlik largely recommends high-grade, well-rated state and local general obligation bonds and revenue-authority bonds. "Municipal credit is still very, very strong," he said. "It's stronger than it was before the Covid crisis." In addition, there can be some value found in beat-up higher-education bonds , he said. While some in the sector are suffering, bonds from a large state system or large organization that isn't having an enrollment problem look good, he said. Howard doesn't focus on general obligation bonds versus revenue bonds, or any specific sector over another. "It's important to look at what is backing that bond, and where are they driving their revenues from," he said. Creating a ladder of varying duration can also make sense, he said. He suggests an average duration of six years. "It really takes the guesswork out of trying to time interest rates," he said.
