All the day’s economic and financial news, including an eagerly awaited Federal Reserve policy meeting
- The agenda: Fed may start unwinding its QE programme tonight
- Policymakers likely to leave rates on hold
- Markets at record levels
- Dow and S&P 500 hit new highs last night
There’s big news in the steel industry this morning.
If I worked at Port Talbot, I wouldn’t much like the look of this para in Thyssen/Tata statement pic.twitter.com/iAqCDoyRwY
Peter Rosenstreich of Swissquote Bank fears that markets could react badly if the Federal Reserve announces that it will start unwinding its stimulus programme, and cut the size of its balance sheet.
He argues that investors are simply too relaxed, given the risks of geopolitical instability around the globe:
The big news event on 20 September will be the report of the US Federal Reserve’s Open Market Committee – we believe the central bank will finally announce plans to start selling its massive holding of bonds. This is likely to begin in October. Meanwhile, the Fed is unlikely to move interest rates.
What does this mean for the US dollar? Possibly a shock. Markets are calm – too calm, really, like those western films where the sheriff rides into an empty town. Despite the tensions in North Korea and the Middle East, despite a see-sawing US president, despite implied volatility, willingness to take risks is historically unprecedented, which we know could end in tears. Markets continue to rationalize this, by seeing low inflation, solid growth and gradual central bank normalization. We’re not so sure. A balance-sheet unloading could end the ‘feel good’ environment, sending both bond and stock markets southward.
Asian markets remained calm today, despite Donald Trump’s threat to ‘totally destroy’ North Korea.
The South Korean won strengthened a little, shrugging off Trump’s remarkable attack on ‘rocket man’ Kim Jong Un.
Today’s front page – Trump, Boris, Gaga… pic.twitter.com/4jOgWV2sw8
Despite myriad different macro-events fighting for attention – including a deadly earthquake in Mexico, the latest hurricane devastation in the Caribbean, Donald Trump’s sabre-rattling speech at the UN and Boris Johnson’s Brexit boasting – the markets are only interested in one thing this Wednesday: September’s Federal Reserve meeting.
World stock markets are at record highs as investors await tonight’s Federal Reserve decision.
The MSCI All Country World Index has nudged up to 487.66, up from 487.37 yesterday.
Investors are buckling up for another Fed policy update which may contain news and/or hints about the timing of further policy tightening by way of balance sheet unwinding and the next rate hike.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The element that investors are going to pay a lot of attention is the update on the dot plot. We expect the Fed to show more softer approach to the future interest rate hike.
According to their last projection, the Fed expected seven rate hikes by the end of 2019. However, in the new forecast, the market is widely expecting them to drop one interest rate hike.