• The Fed fund futures forward curve is indicating Fed Chairman Powell will announce the Fed fund rate has been left unchanged at the conclusion of the FOMC meeting Wednesday afternoon.
• Any expectation for a rate cut has been pushed back until the September meeting.
• As of Wednesday morning there is still now indication of rate hikes until March 2027.

The latest US Federal Open Market Committee comes to an end Wednesday afternoon, concluding with the announcement on interest rates. Based on the Fed fund futures forward curve, the expectation is for Fed Chairman Powell to announce no change, with the FOMC expected to continue to monitor the effects of tariffs, trade wars, inflation, labor markets, etc. 

Wednesday morning the Fed fund futures forward curve shows:

• The nearby June futures contract (ZQM25) is priced at 95.6725, putting the expected Fed fund rate at 4.3275%
  • 100% – futures price
• Still within the Fed’s target rate range between 4.5% (red line) and 4.25% (green line)
• Meaning the market is indicating no change is expected this month

Additionally, with the next Fed meeting is scheduled for July 29 and 30:

• The July futures contract (ZQN25) is priced at 95.675 dropping the expected rate to 4.325, also above the Fed’s low end
• The August contract (ZQQ25) is priced at 95.705, dropping the expected rate to 4.295, still above the low-end target
• The September futures contract (ZQU25) was priced at 95.765, putting the expected rate at 4.235
  • Indicating the next rate cut could come at the conclusion of the September meeting (16th and 17th)

However, if you go back through the archives arch you’ll see the expectation for a rate cut continues to be pushed back, meaning our focus needs to be on the initial 3 months of the forward curve. This highlights the fact the market can and will change over time, depending on changing economic conditions.

What does this mean for other markets? 

• The monthly chart for the US dollar index ($DXY) continues to show a long-term downtrend. However, the greenback has rallied off this month’s low 97.60 to sit near 98.60 as of this writing. The argument could be made that a continued unchanged rate, with the possibility of an increase down the road, could lead to a stronger Index. On the other hand, I don’t see central banks moving back to the US dollar as a safe-haven currency in the foreseeable future.
• US stock indexes still look to be in long-term downtrends, even if the three major indexes close higher again this month. The idea interest rates aren’t going down, and in fact could go up to fight inflation, could lead to renewed selling of US stocks over the coming months.
• There is a lot more at play in the gold market (GCY00) than just a hedge against inflation. There is also the failing faith in the United States as a global leader, leading to increased global destabilization with the most recent example the escalation of the fighting between Iran and Israel. 

As for inflation, it’s interesting to note the vertical rally in US boxed beef markets. This week alone has seen: 

• Monday
  • Choice was reported priced at $382.11, up $4.23 from last Friday
  • Select was priced at $367.47, up $3.97 for the day
• Tuesday
  • Choice came in at $386.51, up another $4.40
  • Select was priced at $372.54, adding a staggering $5.07 for the day

The question now has to be about demand: With beef export shipments still running 9% below last year’s pace, how long will US consumers continue to support beef at these prices? And if US boxed beef is a read on inflation, will it be one of the triggers for the FOMC to ultimately raise the Fed fund rate rather than make its next cut?