It will be interesting to see if the FOMC will be our flickering beacon of hope in the world of economics so that the pure rational economic thought will find support by the Fed’s thinking, planning and action. 

The Fed seems unlikely to change its policy today notwithstanding, economically speaking, there is justification for a rate hike.

The Fed is however in a political economic context and because of that, that rate hike justification then fades. International uncertainty, the strong labor market, weak looks on headline figures, and so forth, mean this is unlikely to be the right time to rate hike from a point of spin regardless of the substance.

However, what today’s FOMC meeting or what rather today’s Fed Chair Janet Yellen’s news conference does allow is, hopefully, setting out of a framework within which the Fed can be expected to raise rates in the coming months.

U.S. retail sales rose at a good pace in May, which is the latest evidence of accelerating growth. Retail sales climbed a seasonally adjusted 0.5 percent in May after a 1.3 percent surge in April, which was the strongest advance in more than a year.  Consumer spending, which accounts for two-thirds of U.S. economic output, evolves at a healthy pace and that is something that adds to the necessity for the Fed of establishing a framework.

It’s also a fact wage increases continue on their way up with the Atlanta Fed wage tracker coming in at +3.5 percent y/y.

Without any doubt, financial markets are in great need for clarity from the Fed, especially in today’s world of polarized politics.

On the polarized politics debate there is a Bloomberg poll showing Clinton leading Trump in the Presidential race by 12 points. The poll has been conducted, both before and after the attack in Orlando.

Investors should be aware that this is not a poll to take seriously in the sense that opinion polls so far in advance of the vote can never been taken seriously, but the detail of the poll offers some interesting insights into the nature of the debate ahead, particularly with the reported further of the supporters of each candidate.

Meanwhile the United Kingdom has been quietly adding to volatility with a further collection of opinion polls showing the leave vote moving ahead in the EU referendum debate.

The polls, of course, cause sterling weakness but also some contagion with a flight to quality in other financial markets like, for example into 10-year U.S. Treasurys whose yield has come down (= price up) to 1.5942 percent.

The problem is that at this stage there can be no intelligent assessment of the risk of an UK exit, or indeed of the proper consequences. There will be a lot of unintelligent assessments circulating markets to be sure and that is the problem we are gone have to face up to.

Even looking at the change in opinion polls for an assessment is unreliable, as the polling companies have changed their methodology in recent weeks.

The veil of ignorance is not going to be lifted anytime soon.

A just released Pew Research Center report demonstrates support among several EU states for the European Union has fallen over the past 12 months, of which the most important country is Germany where EU’s popularity is now down by 8 points to just 50, which is reason for some concern.

The Pew survey also reveals that 48 percent of British voters have an unfavorable opinion about the EU, compared to 44 percent who are in favor, which can helpful for understanding why a UK exit from the EU remains a possibility.

The data also reveal a growing skepticism in France, with support for the EU falling 17 percent in a year to 38 percent.

The EU’s handling of the migrant crisis is viewed negatively by some 94 percent of Greeks (unsurprisingly!), 88 percent of Swedes, 77 percent of Italians and 75 percent of Spaniards.
Besides all that, in the U.S. we’ll have also today producer price inflation data, which is interesting as it gives the Fed a representation of pricing power of larger listed companies than does consumer price inflation.

Companies sell to other companies for the most part, but it’s also a fact that equity markets are dis-proportionally skewed towards manufacturing and away from services.

We’ll have also industrial production and capacity utilization, which is perhaps of less interest, but it will help to pass the time until we hear from the FOMC.

Etienne "Hans" Parisis is a bank economist who has advised global billionaires and governments on the financial markets and international investments. To read more of his articles, GO HERE NOW.