U.S. futures traded lower in early Thursday trading after hawkish signals from the Federal Reserve’s minutes fueled global risk-off trade.
The minutes from the June 13-14 FOMC meeting showed Fed officials were split on the decision to pause interest rate increases in June’s meeting. Moreover, the minutes hint that the Fed is likely to hike again in 2023.
This is also the view of economists at Citi Research.
“Minutes to the June 13-14 FOMC meeting confirmed that the decision to 'skip' a rate hike but raise 'dots' to signal two more 25bp hikes this year was a compromise between doves and hawks. Most important is what the minutes do not say – they give no new guidance regarding the timing of further rate hikes,” they wrote in a client note.
“We think officials will take a data-dependent meeting-by-meeting approach, which will likely lead to 25bp rate hikes in July and September.”