The suspense over what the FOMC is thinking will end today at 2:00 p.m. ET. That's when a new policy directive will be issued along with updated economic and interest rate projections. Fed Chairman Powell will communicate the Fed's thinking at a press conference that is scheduled to begin at 2:30 p.m. ET.
There are other things on the market's mind today, yet nothing is more important than the communication from the Federal Reserve.
It is considered to be a virtual certainty that the FOMC will raise the target range for the fed funds rate by 25 basis points to 1.50% to 1.75%. It is also thought to be a given that the Federal Reserve will raise its economic growth forecast.
The uncertainty for the market is what the Federal Reserve's dot-plot will show. Will it show a median estimate of four rate hikes this year or will it stick to a median projection of three rate hikes?
A fourth rate hike has not been priced in to a large extent. The CME FedWatch Tool shows a 38.6% probability of a fourth rate hike in December.
Accordingly, it would be seen as a negative if the dot plot reveals an inclination to raise the target range for the fed funds rate four times this year. There is some potential for an initial relief rally, though, if the dot plot sticks at three since the market has been on edge about the prospect of a fourth rate hike.
The uncertainty surrounding this open question is why the eventual answer is certain to be a market-moving event. Currently, the market isn't moving much. The S&P futures are down two points and are trading less than 0.1% above fair value.
The market, however, will have other things to consider in the interim, namely the following:
- Reports by The Wall Street Journal that the Trump Administration will announce $30 billion of tariffs on Chinese imports and that China stands ready to respond with tariffs on U.S. agricultural exports
- The ugly weather in the Northeast that is grounding thousands of flights and could curtail trading volume
- Ongoing concerns about Facebook's (FB) data protection measures
- The ongoing effort by Congress to reach an agreement on an omnibus spending bill
- Disappointing earnings guidance from General Mills (GIS), which is down 8.7% in pre-market action
- Southwest Airlines (LUV) cutting its first quarter guidance for revenue per available seat mile
- FedEx (FDX) reporting better than expected earnings and guidance, but not seeing its stock benefit (yet) on the other side of that report. Shares of FDX are down 0.8%.
- Salesforce.com (CRM) acquiring MuleSoft (MULE) for an enterprise value of ~$6.5 billion and at a 36% premium over MULE's closing price on Monday; and
- The news that Nordstrom's (JWN) Special Committee, citing disagreement on price, has terminated discussions with Nordstrom family members who had been pursuing a go-private transaction
But, wait, there's more!
Oil prices are up 2.2% to $63.42 per barrel, the 10-yr note yield has hit 2.90%, and the fourth quarter current account deficit widened to $128.2 billion (Briefing.com consensus -$125.0 billion) from a downwardly revised -$101.5 billion (from (-$100.6 billion) in the third quarter.
The Existing Home Sales report for February (Briefing.com consensus 5.42 million; prior 5.38 million) will be released at 10:00 a.m. ET.
There is plenty of news to chew on, but the main dish has yet to be served. That dish is the FOMC news and it remains to be seen if it will be served to the market cold or warm.