The cash market looks poised to push higher at the start of trading. The S&P futures are up six points and are trading 0.2% above fair value.
The impetus for the early advance has been a 1.9% pop in crude oil prices (+$0.89 at $48.61), which has followed on the heels of the American Petroleum Institute's report that oil inventories saw a draw of 0.53 million barrels in the latest week while gasoline stockpiles saw a drawdown of 3.875 million barrels.
The move in oil prices is notable, but for some context, it follows a 10% decline in prices over the last week. Prices might have been ready to rebound regardless from a short-term oversold condition, yet they have gotten added ballast from the favorable inventory report.
What oil traders will be watching to see is if that rebound on a bullish headline catalyst can be sustained. The Department of Energy releases its weekly inventory report today at 10:30 a.m. ET.
Traders of all stripes will be watching the FOMC decision, interest rate projections, and Fed Chair Yellen's press conference today. The first two items will hit the wires at 2:00 p.m. ET and the press conference to explain the committee's thinking will occur at 2:30 p.m. ET.
The market is pretty much banking on the Fed raising the target range for the fed funds rate by 25 basis points to 0.75% to 1.00%. What everyone is waiting to see is what the "dot plot" reveals about the projected path of future rate hikes.
The market should be content to see a total of three rate hikes projected for 2017, but any more than that, and it could act a little antsy. Additionally, any talk of potentially reducing the Fed's balance sheet could cause a stir as a balance sheet reduction would be regarded as a tightening influence.
Market participants, ideally, will be looking for a "benevolent rate hike" today, which would involve a 25 basis points increase in the target range, a reiteration that the path to normalization is expected to be gradual, the continued outlook for only three rate hikes this year, and no sense the balance sheet is going to be pared all that soon.
Stay tuned. There will be a tale of two markets today. The one before the FOMC decision and the one after the FOMC decision.
This morning's data isn't going to change anything with respect to the prevailing outlook for today's rate decision.
Total CPI for February was up 0.1% and core CPI, which excludes food and energy, was up 0.2%. Both figures matched the Briefing.com consensus estimate.
The key takeaway from the report is that consumer inflation is certainly firming and offering a data-based rationale for the Fed to move on rates.
On a year-over-year basis, total CPI is up 2.7% before seasonal adjustment and core CPI is up 2.2%. February was the 15th straight month that the 12-month change for core CPI was between 2.1% and 2.3%.
Retail sales for February were also pretty much in-line with expectations. Total sales increased 0.1% while retail sales, excluding autos, increased 0.2%. The upshot of the February report is that it contained upward revisions for January retail sales (from 0.4% to 0.6%) and retail sales excluding autos (from 0.8% to 1.2%).
The key takeaway from the February report, though, is that retail sales activity didn't necessarily corroborate the high readings seen for consumer confidence.
Monthly sales declines were registered across a number of discretionary categories, led by electronics and appliance stores (-2.8%), miscellaneous store retailers (-0.8%), clothing stores (-0.5%), sporting goods, hobby, book and music stores (-0.4%), general merchandise stores (-0.2%), and food services and drinking places (-0.1%).
Separately, the Empire Manufacturing Survey dipped to 16.4 in March from 18.7 in February. That won't cause any undue concern considering the New Orders Index climbed to 21.3, which is its highest level in several years, and the overall reading is still well above the 0.0 dividing line between expansion and contraction.
The S&P futures ticked up a notch following the release of the aforementioned data, solidifying a positive tone that was previously in place.