Fed Minutes Signal Further Rate Increases
Danny Riley of MrTopStep - InsideFutures.com - Thu May 24, 9:30AM CDT

This article was originally published on Nadex.com.

If higher interest rates are supposed to be a negative for the economy, it sure didn't seem that way after the Fed released its May minutes yesterday.  The release said that said that ‘it would likely soon be appropriate’ for another rate rise.

Tell me I am wrong, but it is really looking like the possibility of four rate hikes this year is real. According to the minutes released yesterday, officials said continued interest rate increases could leave the benchmark rate “at or above their estimates of its longer-run normal level before too long.” So much for the era of historically low interest rates....

Our view is that when it comes to the equity markets, it’s not a good idea to get overly bullish or bearish at this point. Everything seems to be news-driven. After President Trump said that the US may have to put off or cancel the meeting with North Korean leader Kim, the markets sold off; but like the market reactions to most news-driven events, this reaction did not seem to last too long.

After a few days of weakness, the sellers showed back up Tuesday night into Wednesday morning; however, the selling dissipated, leaving the sellers short at low prices. After running the sell stops early in the day, the S&P 500 (ES) short covered and ran the buy stops.  

I am still bullish, but that doesn't mean the ES is going to go straight up. The ES has to get above 2742 and close above there to keep going up, and even then I think it won't come without some drops.

We lean toward selling the early rallies and buying weakness with tight stops. Over the last two days, the mutual / ETF funds have sold $2 billion MOC. If they decide to put that money back to work today, I think we could see some type of late day rally.

Today’s economic calendar, shown below, is busy, but the only anticipated market mover will be the home sales number at 10:00. Overnight, the global equity markets were mixed and the U.S. equity futures were quiet. The halfway area of this week’s range so far in the ES is 2723, which gives us a good reference point going into the end of the week.

Get more of today’s market news & video at Nadex.com.