Markets Obsess Over Fed's Quarterly Rate Projections By Hardika Singh

The Federal Reserve is set to begin its two-day policy meeting later today and investors are obsessing over whether the central bank's officials will pencil in one or two interest rate cuts this year. Markets' fixation on the quarterly rate projections obscures remarkable cohesion among rate-setters over their wait-and-see stance. Meanwhile, the much-anticipated recession is nowhere to be seen, but don't get too comfortable. And the White House is close to naming derivatives regulator Christy Goldsmith Romero to head the Federal Deposit Insurance Corp. Read on for this news and more.

Top News Investors on Tenterhooks for Fed's Latest Rate-Cut Projections

The Federal Reserve is on track to hold steady its short-term benchmark rate in a range between 5.25% and 5.5% on Wednesday. Officials are also likely to keep the guidance in their closely parsed policy statement that teases that their next rate move is more likely to be down than up. That explains the intense spotlight on rate projections revealing how many officials anticipate one or, possibly, two rate cuts this year depending on their economic outlook. The exact distribution could be shaped at the last minute by a widely watched inflation report to be released Wednesday morning, hours before officials publish their own projections that afternoon.

U.S. Economy Why the Recession Still Isn't Here

The recession, predicted by business executives, economists, and investors, refuses to show up . Steady hiring continues to fuel consumer spending and, in turn, an economic expansion unlike any the U.S. has seen.

Financial Regulation White House Prepares to Tap Derivatives Regulator to Oversee FDIC

The White House is close to naming Christy Goldsmith Romero, a Democratic member of the Commodity Futures Trading Commission, as the next head of the Federal Deposit Insurance Corp. , replacing the beleaguered banking agency's longtime chairman Martin Gruenberg.

Forward Guidance Tuesday (all times ET)

6 a.m.: NFIB Index of Small Business Optimism

Wednesday

8:30 a.m.: Consumer price index

2 p.m.: U.S. interest rate decision

Research French Covered Bond Spreads Likely to Widen After Snap Elections Announcement

Credit spreads on French covered bonds are expected to widen due to increased uncertainty after French President Emmanuel Macron announced snap elections at the end of June, ING analysts say in a note. Covered bonds are debt issued by financial institutions and often backed by mortgages. The political uncertainty arising from the announcement has caused spreads on French sovereign bonds to widen, "making it hard to believe that French covered bond spreads will stay unmoved by this event, " ING says. - Miriam Mukuru

Basis Points The dollar could rise further after Friday's strong U.S. nonfarm payrolls data caused markets to reduce expectations of interest-rate cuts by the Fed even more ahead of a meeting this week, says Lee Hardman, senior currency analyst at MUFG, in a note. "The strong employment report increases the risk of the Fed providing a more hawkish policy update," he says. "Recent developments have increased the risk that the U.S. dollar will remain stronger for longer." - Emese Bartha Risky startups with a flair for digital marketing are using a regulatory exemption that allows them to hype their moonshot products and raise huge sums of money from individual investors. The Securities and Exchange Commission approved the exemption nearly a decade ago, as part of an effort to make it easier for smaller companies to raise capital. - Dave Michaels Property owners have long seen restaurants as risky tenants with a high rate of failure. Now, with Americans dining out more than ever, the restaurant business is emerging as the hottest corner of retail real estate. Food services accounted for more than 19% of all retail leases last year, rising in recent years to the highest proportion for any category since data firm CoStar Group began tracking the statistic in 2007. - Kate King The European Central Bank may leave its key rate unchanged for more than one meeting as it awaits confirmation that inflation is on a path to its target, President Christine Lagarde said in an interview published Tuesday. The ECB last week lowered its key interest rate, but said it wasn't committing to a particular path over coming meetings. It also raised its inflation forecast for this year and next. - Paul Hannon Wages in the U.K. continued to grow rapidly in the three months to April, a concern for the Bank of England as it prepares for a policy meeting next week. Average earnings, excluding bonuses, between February and April were 6.0% higher than a year earlier, the same as in the first quarter of this year, according to data from the Office for National Statistics published Tuesday. - Ed Frankl Australian businesses reported a reacceleration in inflation pressures in May despite the backdrop of a lifeless economy. The results of the latest monthly survey of firms by the National Australia Bank paint the worst of worlds for the Reserve Bank of Australia, which may need to raise interest rates further before it can claim victory over inflation. - James Glynn About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [hardika.singh@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.


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06-11-24 0715ET