Today in the US - Calendar & Market Outlook for Thursday, June 20
The data calendar in the U.S. today will be the busiest of the week. In addition to the weekly Jobless Claims release, the data highlights will be the Philly Fed Index, Existing Home Sales, and Leading Indicators.
Today in the U.S.
Bernanke in Brief: No Agency MBS Sales in Exit; No Comment on His Exit
* Bernanke indicated that the Committee is working on the exit strategy, but said no plans to sell Agency MBS.
* Said an unemployment rate of 7% would be consistent with timing of end of asset purchase program, probably around mid-2014.
* Repeated the fed funds rate target would remain low for a considerable time after the 6.5% unemployment rate goal was reached in a context of price stability; could lower threshold for unemployment rate.
* Noted the effect of government medical payments during the sequester as one transitory factor in low inflation.
* Declined to comment on if and when he would be leaving the Federal Reserve.
Fed's Survey of Economic Projections--June 18/19
The Fed's Survey of Economic Projections (SEP) released today revealed some downward tweaking of the outlook for the unemployment rate, while lowering the outlook for the PCE deflator.
Federal Reserve Research
FOMC Statement from June 18-19 More Upbeat on Economy, Diminished Risks
1. No change in policy, asset purchases to continue at $85 billion per month.
2. Some adjustments in language, including to inflation running below 2% 'partly reflecting transitory influences', 'downside risks diminished since the fall'.
3. Kansas City Fed's George dissents for a fourth time on risks of future imbalances; St. Louis' Bullard dissents wanting stronger signal on willingness to defend inflation goal of 2%.
Global Equity Perspective: US Equities Show the Best Posture Ahead of FOMC
Since the May highs, it has been our view that the benchmark S&P 500 is poised to trace the most prolonged corrective pattern since the September '12 through November '12 timeframe. To this point, the index has met this expectation, and after satisfying a number of key measured counts produced during the early stages of the post-05/22 down-cycle down to a confluence of support levels in the 1600 area during the first week of June, the S&P 500 appears content in its current range ahead of this week's highly anticipated meeting. Although we see a higher risk of the S&P 500 finally satisfying AT LEAST a 5% correction from the May 21st close before the next sustained leg higher takes hold, a continued lack of selling interest by the market below the 1600 area will offer the bearish case very little traction.