The major equity indices have pulled back from session highs and into the red as investors eagerly wait for the minutes from the Federal Reserve Open Market Committee (FOMC) to be released at 2:00PM EST and Fed Chair Janet Yellen will provide comments shortly after at 2:30PM EST. Investors continue to look for clues as to when the Fed might raise interest rates, so once more, language is key since a rate hike announcement likely won’t happen today. Nevertheless, an interest rate hike WILL happen in the near-future, but the odds of it happening in the fall are what the market will care about. This is one of the first times the Fed hawks finally have some tell-tale signs of a recovery based on several strong economic reports – namely consumer, employment and housing data. However, the doves note substantial weakness in industrials and manufacturing, which may be enough to push out the rate hike further.

While the market does its metaphorical thumb twiddling ahead of the Fed minutes, there were a couple minor reports worth noting. Firstly, the Mortgage Bankers Association (MBA) noted a week-over-week reversal in the volume of mortgage applications. The volatility in interest rates led to volatility among mortgage applications as overall applications declined by 5.5% in the week ended June 12^th. Purchase applications declined by 4.0% for the week while refinancing applications dropped by 7.0%. Mortgage rates continued to move sharply higher for the week, jumping by 5 basis points; the rate for the average 30-year conforming loan ($417,000 or less) now stands at 4.22%. However, rates have been coming down this week, after the 10-year Treasury note fell back near 2.3% after spiking close to 2.5% last week. Ultimately, housing data has been strong going into the summer months and we chalk this report up to a near-term fluctuation.

Additionally, the consumer price index (CPI) in the Eurozone is back in positive territory over last year. Inflation increased by 0.3% in May over last year for the first increase in six months. There was no change year-over-year in April and inflation was in-line with consensus expectations. The largest upward impacts came from vegetables (+0.09%), restaurants & cafés (+0.08%) and tobacco (+0.07%), while fuels for transport (-0.34%), heating oil (-0.15%) and gas (-0.08%) had the biggest downward impacts. On a monthly basis, inflation increased by 0.2% in May, which was in line with market expectations. On an individual country basis, negative annual rates were observed among eight member states, with the lowest rates in Cyprus (-1.7%), Greece (-1.4%) and Slovenia (-0.8%) and the highest annual rates were recorded in Romania and Malta (both at +1.3%) and Latvia (+1.2%). Rising inflation in Europe won’t necessarily be reflected in US markets; however this still provides a small forecast of what may come.