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DJIA Futures: +191 (+0.6%)
SPX Futures: +31 (+0.8%)
NASDAQ Futures: +115 (+1%)
Good morning friends!
Futures are rising as traders brace for a big Fed rate hike.
Let’s get right to it!
The Federal Reserve releases its rate hike decision at 2:00 p.m. ET today with Chair Jerome Powell’s press conference at 2:30 p.m. ET.
CME Group’s FedWatch Tool shows the market sees a 98.6% chance the Central Bank will raise the federal funds rate by 0.75%.
Traders ramped up those expectations after the May CPI and PPI both came in hot.
It would be the biggest hike in 28 years, as inflation stands at a more than 40-year high.
Analysts expect a steep sell-off if the Fed sticks with a 50 basis point hike instead as the bank appears to be way behind on inflation.
The bank is also expected to adjust its future outlook for more aggressive hikes.
Economists expect the Fed to lower its GDP forecast and raise its forecast for inflation and unemployment.
U.S. retail sales fell for the first time in five months in May as inflation squeezes consumer spending.
The Commerce Department reported retail sales fell 0.3% last month to $672.9 billion.
That missed economists’ expectations for a 0.1% increase.
Gasoline sales surged 43.2% compared to a year ago as gas prices began their record-breaking climb in May.
The monthly drop in overall retail sales was mostly due to a decline in auto purchases.
Excluding autos and gasoline, so-called core retail sales rose 0.1%.
But that was lower than expectations for a 0.8% increase.
And when adjusted for inflation, real retail sales tumbled more than 1%.
The meltdown in the crypto market is continuing.
Bitcoin is down 4.6% in the past 24 hours at just over $21,000 while Ethereum is 7.6% lower at $1,100.
Bitcoin hit a low of around $20,200 earlier in the morning.
The coin is down more than 70% from its all-time high in November.
Coinbase (COIN) shares are sliding 1.9% ahead of the open.
U.S. gas prices took a break from their record-breaking climb today.
AAA shows the national average for regular gas dipped back to $5.014/gal today, down from $5.016/gal on Tuesday.
That price is still 54 cents higher than a month ago and $1.938 higher than a year ago.
But diesel prices did not follow suit.
The national average for diesel jumped to $5.780/gal today from $5.775 on Tuesday.
Oil prices are slipping amid fears of an economic slowdown ahead of the Fed rate hike.
West Texas Intermediate crude futures are down 0.4% at $118 bbl while Brent crude futures are falling 0.2% to $121 bbl.
The American Petroleum Institute reported late Tuesday that U.S. crude inventories rose by 736,000 barrels last week while gasoline stockpiles fell by 2.2 million barrels.
The Energy Information Administration reports official inventory levels today.
Analysts expect the EIA to report a 1.1 million barrel decline in crude inventories and a 100,000 barrel increase in gas inventories.
Mortgage demand rose slightly last week but is still down sharply compared to a year ago.
The Mortgage Bankers Association reports new purchase applications rose 8% weekly but were down 16% year-over-year.
Refinance applications were up 4% weekly and plunged 76% annually.
Overall application volume was down 52.7% compared to a year ago.
The average 30-year contract rate rose to 5.65% last week from 5.40% the week before.
But that rate has since skyrocketed.
Mortgage News Daily shows the average 30-year rate rose 10 basis points on Tuesday alone, to 6.28%.
That jump came after a 33 basis point increase on Monday.
It’s the first time mortgage rates have been above 6% since 2008.
The National Association of Homebuilders releases its June sentiment index at 10:00 a.m. ET.
That survey is expected to fall to 67 from the 2-year low of 69 in May.
The index measures sentiment about current market conditions, buyer traffic, and expectations for 6-months from now.
It would be the fifth straight month of declining sentiment as builders struggle with ongoing supply chain issues, a labor shortage, and now rising mortgage rates.