Coffee With Greta: How Much Pain Will the Fed Cause?

DJIA Futures: +153 (+0.5%)

SPX Futures: +20 (+0.5%)

NASDAQ Futures: +51 (+0.4%)

Good morning friends!

Futures are rising as focus turns to today’s Fed rate hike decision.

Let’s get right to it!

Fed Decision Day

The Federal Reserve releases its latest rate hike decision at 2:00 p.m. ET today, followed by Chairman Jerome Powell’s press conference at 2:30 p.m.

And although traders are anticipating another big move, what the Fed says about the future may be more important. 

CME Group’s FedWatch Tool shows the market pricing in an 82% chance of another 75 bps hike. 

But how much higher rates will go and how long they will stay there are of main concern now. 

The FOMC statement includes futures projections for the Fed funds rate, inflation, and unemployment.

Powell has previously said Americans will have to experience some “economic pain” in order to lower inflation, which includes higher unemployment.

Fed officials are predicting rates to stay elevated through at least the end of 2023.

General Mills Beats Expectations, Hikes Forecast

General Mills (GIS) shares are up 2.4% ahead of the open after beating fiscal Q1 expectations and raising its full-year outlook. 

Here’s how the food company’s results compared to analysts’ expectations:

• Adjusted EPS: $1.11 vs $1.00 expected
• Revenue: $4.72 billion, in line with expectations

Across North America, retail sales rose 10%, foodservice sales rose 21%, and pet sales jumped 19%. 

That strong growth helped offset a 30% drop in international sales. 

General Mills now expects year-over-year adjusted earnings growth of 2% to 5%, up from flat to 3% previously. 

Mortgage Demand Rises for First Time in 6 Weeks

Mortgage application volume increased last week for the first time in six weeks. 

The Mortgage Bankers Association reported purchase applications rose 1% weekly but were still down 30% year over year. 

Refinance application jumped 10% weekly and were down 83% annually. 

The increase came even as mortgage rates continued to rise. 

The average contract rate on a 30-year fixed mortgage rose to 6.25% from 6.01%.

Oil Prices Jump As Ukraine War Intensifies

Oil prices are rising today amid fresh supply concerns after Russian President Vladimir Putin announced a new military mobilization in Ukraine.

West Texas Intermediate crude futures are up 1.5% to $85 bbl while Brent crude futures are up 1.5% to $92 bbl. 

Putin signed a decree mobilizing more troops on Wednesday. 

He claims he is defending Russian territories and that the West wants to destroy the country. 

Meanwhile, the American Petroleum Institute reported a smaller-than-expected increase in crude stockpiles last week. 

U.S. oil inventories rose by 1.035 million barrels vs 2.321 million expected. 

The Department of Energy released 6.9 million barrels from the Strategic Petroleum Reserves last week.

The Energy Information Administration reports official inventory levels today. 

Existing Home Sales Expected to Fall

The National Association of Realtors reports existing home sales for August at 10:00 a.m. ET. 

The report is expected to show sales declined to a seasonally adjusted rate of 4.68 million units last month from 4.81 million in July. The U.S. housing market has seen a dramatic slowdown in buyer activity as mortgage rates surge. 

In Case You Missed It

• Ford (F) suffered its worst day in more than 11 years on Tuesday, tumbling 12.3%. The drop came after the automaker warned Q3 costs will be about $1 billion more than previously forecast. The company has been struggling with inflation and continued supply chain issues. Ford projected Q3 EBITDA will be between $1.4 billion and $1.7 billion, far below analysts’ expectations of $3 billion.