Markets: News  

The stock market went into a higher gear following the release of the FOMC Minutes for the May meeting, which conveyed a notion that members want to move expeditiously to get to the neutral rate.The neutral rate of course is a moving target. You kind of know it when the data suggest you hit it, but for now it sits in the neighborhood of 2.50%. The target range for the fed funds rate is currently 0.75-1.00%, and Fed Chair Powell has already intimated that 50 basis point rate hikes are likely at the June and July FOMC meetings. That would leave things at 1.75-2.00% if that's how it played out, so the arrival at "neutral" could come as early as the September FOMC meeting if the Fed stayed on a similar tightening course.There are a few considerations that likely helped drive the post-Minutes upswing:Market participants like the idea at this point that the Fed wants to get to the neutral rate expeditiously. Doing so presumably would help cool inflation pressures sooner rather than later (it is highly debatable that 2.50% is the bogey for an inflation rate that still sits above 8.0%).Market participants also like the idea that the Fed could be hitting the "pause" button on rate hikes before the year is done. That view was borne out of the indication that many participants judged that an expeditious removal of policy accommodation would leave the Committee "well positioned later this year" to assess the effects of policy firming.These ideas will certainly be put to the test in coming months, but for a market in an oversold condition, and desperate to have a ray of hope as it relates to future rate hikes, they were enough to generate some excitement that drove the S&P 500 to the threshold of the 4,000 level before being met with resistance.Strikingly, the 2-yr note sits unchanged at 2.50%, little changed from where it was before the release of the Minutes.