Investors seem to be in a holding pattern while awaiting the Fed’s upcoming policy meeting on June 13 and 14. Economic signs suggest that inflation is inching down, even as it remains above the central bank’s 2% target. Mayfield added that the Fed may “feel a little bit more comfortable pausing in June, with plenty of optionality through July and beyond.”

New data released on Thursday showed initial jobless claims reached their highest level since October 2021, indicating a potentially softening labor market. The uptick also raised hopes that the Fed would pause its rate-hiking campaign at its meeting next week.

However, Mayfield noted a pause may not necessarily mean an end to its rate-hike campaign. He said the Bank of Canada’s decision to resume raising rates after a pause earlier this week could “add some color to a Fed decision.”

Markets are pricing a roughly 72% chance that the Fed keeps rates steady at the next meeting, according to the CME FedWatch Tool.