• The Fed fund futures forward curve is indicating no change in the rate this month, with the a possible cut pushed back another month to July.
• Back in January, this same forward curve indicated the May meeting could conclude with a rate cut, highlighting the reality that markets change over time.
• Chairman Powell has already talked about inflation tied to tariffs and trade wars, putting the spotlight on his post-meeting comments. 

We've reached Wednesday morning meaning later today, 14:00 (ET) to be exact, US Fed Chairman Powell will announce no change in interest rates. At least not for now. How do I know this? Do I have a crystal ball that allows me to see into the future? I wish. As a friend from southwest Kansas told me Monday, if I knew what was going to happen I'd be on a beach somewhere drinking Mai Tais. I fully agreed with him. Yet here I am, in the basement office, staring at a cinder block wall making predictions. That says it all. But it isn't really a "prediction" to simply repeat what the market is saying. And by market, I mean the Fed fund futures forward curve (always fun to say).

Heading into Wednesday’s session, the Fed fund futures forward curve shows:

• The nearby May futures contract (ZQK25) was priced at 95.675, putting the expected Fed fund rate at 4.325% (100% – futures price)
• Comfortably within the Fed’s target rate range between 4.5% (gray line) and 4.25% (orange line)
• Meaning the market is indicating no change is expected with today’s announcement

Additionally, with the next Fed meeting is scheduled for June 17 and 18:

• The June futures contract (ZQM25) is priced this morning at 95.715 dropping the expected rate to 4.285, still above the Fed's low end.
• The July contract is priced at 95.755 (ZQN25), dropping the expected rate to 4.245, just below the low end target.
  • Indicating the next rate cut could come at the conclusion of the July meeting (29th and 30th)

However, if you go back through the archives to my piece from March it was the June futures contract indicating a change in rates. In my piece ahead of the January meeting I talked about how the May  futures contract showed a possible rate cut. The expectation continues to be pushed back, meaning our focus needs to be on the initial 3 months of the forward curve. It is important to remember the market can and will change over time, depending on changing economic conditions. Particularly in this time of certain uncertainty.

Lastly, given the Fed is not expected to make a rate cut at this time, the spotlight will be on what Chairman Powell has to say in his post-meeting remarks. There will be a number of ridiculous questions asked, but those paying attention will take note of Mr. Powells comments on possible rate hikes rather than cuts to battle the inevitable inflation sparked by endless trade wars and tariffs. 

Grab your popcorn.