PPI numbers came in below estimates and there is now a 50% chance of an interest rate cut in March. The Fed will outline their interest rate expectations in the Summary of Economic Projections today.
TRANSCRIPT
Good afternoon, traders. It’s Chris Chavez with Blue Line Futures and it’s your daily midday market minute. Equity markets are quiet ahead of the FOMC summary of economic projections, an interest rate decision. But before we get to it, if you’re watching this video like it, subscribe if you’re on our website, there’s also a link to direct you to YouTube and you can subscribe that way.
We’d love for you to follow us. We’d love for you to help us build our following. Yeah. So this morning we got pin numbers and we saw no increase in the producer price index estimates month over month, we’re calling for 1/10 increase and we saw no inflation. So, you know, initially the markets did respond to that economic data.
You know, we saw a nice pop on the Nasdaq, you know, and right now the Nasdaq is relatively outperforming. The other stock indices leading the way higher, just about in positive territory, up about 2/10 of a percent or so as of this video. Now, we do have the Fed’s summary of economic projections in the interest rate decision. So more important than the interest rate decision itself is definitely the summary of economic projections where we’re going to get the dot plot.
Now that’s going to outline the Fed’s interest rate expectations for 2024. That’s really important because that’s going to be compared with current market expectations. So when you look at the CME Fed watch tool after getting those high numbers this morning, there’s a 5050 chance of a cut in March. Now there’s also an 80% probability of a cut as soon as May.
So if you see the Fed’s interest rate expectation, Asians differ significantly from that. Maybe we don’t see a cut show up in the Fed’s interest rate expectations until June. You’ll really see a large repricing in the Treasury market. We probably see a little bit of selling pressure when looking at, you know, the Nasdaq, the S&P, you know, equity markets.
And really it’s just going to depend on the guidance that we also hear from Fed Chair Powell. Now, we’re looking at crude oil today. We did get a much larger draw in inventories than expected. Crude is in positive territory. So major overhead resistance you’re going to want to keep an eye on 7055. That’s a two star level, not extremely significant, but still a major level to keep an eye on, especially kind of confirming a reversal a bit.
The first level that you’re going to want to keep an eye on. And we’re looking at the S&P and the Nasdaq on the March contract, 4707 and a quarter. That’s major four star resistance for the S&P, for the Nasdaq to star resistance, not as significant of a level 16 6057 gold. You really want to hold 1993 to 1997 as support to see more momentum.
If you have any questions, reach out to our trade desk. We’re here for you. Remember, futures trading involves substantial risk of loss and is not suitable for all investors.