Stocks mixed ahead of Fed. US stocks opened mixed the day after the Nasdaq hit 10,000 for the first time ever. Asia was mixed, while Europe is widely lower. A decision by the Federal Reserve (Fed) on interest rate policy is the big event today, but concerns over higher COVID-19 cases in some states as the economy opens back up and individual investors driving the recent equity strength are in the spotlight.
Fed in a delicate spot. The Federal Open Market Committee (FOMC) is set to announce its latest policy statement today. After the surprise spike in jobs in May, many are anxious to hear the FOMC’s thoughts on the economic turnaround. It is widely expected to leave rates near zero, but guidance on how long, continued central bank support, and whether they will use their purchasing power to cap yields will be important. Also, they will release new economic projections, the “dot plots,” for the first time in 2020.
10-year yield breaks out. Volatility has finally picked up in the US Treasury market after a quiet May when the yield on the 10-year Treasury note traded in only a 15 basis point (.15%) range. We examine which direction longer-term yields may be headed later today on the LPL Research blog.
Covid-19 news. On Tuesday, new US daily cases rose 0.94%, the fourth straight day of week-over-week improvement. This is after adjusting for a one-time spike in Massachusetts a week ago due to a methodology change, and despite an 8.7% increase in testing. The overall modest improvement masks some deterioration in southern and western states that warrants close attention and could lead to renewed restrictions in the coming weeks (source: COVID-19 Tracking Project).
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