When are the FOMC minutes and how could they affect the S&P 500?
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When are the FOMC minutes and how could they affect the S&P 500?

The Federal Open Market Committee (FOMC) minutes, of the June 9-10th meeting, will be released on Wednesday at 18:00 GMT. At the mentioned meeting, the Federal Reserve (Fed) kept the Fed Funds rate unchanged at 0.00-0.25% as expected.

Key notes

Since the meeting, many Federal Reserve officials spoke in public, including several presentations from Chair Powell. The latest was Tuesday’s testimony at a House Financial Services Committee hearing with Treasury Secretary Mnuchin. Powell signaled that the economic recovery was underway, supporting his argument with the better-than-expected employment and retail sales numbers. At the same time, he warned the future would depend on how the coronavirus evolvers and on fiscal stimulus policies.

Analysts will look into the minutes for clues about the potential for negative rates and/or some kind of yield curve control. “Of particular interest are the Fed members’ discussions on yield curve control, as mentioned by Fed Chair Powell in his prepared remarks at the press conference after the policy announcement”, explained analyst at Dankse Bank.

Joseph Trevisani, Senior Analysts at FXStreet, affirms that with the Fed Funds rate are expected to be static for more than two-and-a-half years, so “the discussions and views around the economic projections will be the main market interest but with little new information expected.”

Implications for the S&P500

Wall Street is rising on Wednesday for the third day in a row, supported by optimism about a vaccine and also after US economic reports. On Tuesday ended the best quarter in years, rebounding from the initial coronavirus slump.

The FOMC minutes are not expected to have a major impact on financial markets. Talks about negative rates or positive signs could clear the way to more gains in equity markets. The S&P 500 is rebounding from the 3,000 area and stands around 3,110 points. The next critical resistance on the upside is seen around 3,150 and a break higher would clear the way to 3,200.

If the Fed offers a pessimist outlook or suggests that easing is near its limit (very unlikely), risk aversion will set it in pushing Wall Street indexes to the downside. The immediate support stands at 3,080. A consolidation below the mentioned level would expose 3,050. If the decline continues, a new test of 3,000 will likely take place.

About the FOMC minutes

FOMC stands for Federal Open Market Committee. It organizes eight meetings per year where it reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.

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