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U.S. government debt prices were slightly higher Wednesday morning as investors awaited the outcome of the Federal Reserve’s two-day meeting, which should offer a glimpse into the country’s economic recovery prospects.

 

At around 2 a.m. ET, the yield on the benchmark 10-year Treasury note was down at 0.6740% while the yield on the 30-year Treasury bond edged lower to 1.4226%. Yields move inversely to prices.

 

 

·         Fed expected to raise economic forecasts, extend vow to keep rates low

 

The Federal Reserve is expected to wrap up its latest policy meeting on Wednesday with somewhat rosier economic forecasts but a renewed pledge to keep interest rates low for as long as the world’s biggest economy needs to recover from its deepest downturn in decades.

 

The two-day meeting is the U.S. central bank’s first under a newly adopted framework that promises to shoot for inflation above 2% to make up for periods, such as now, where it is running below that target. The strategy means the Fed will not take its foot off the monetary gas pedal even if unemployment continues to drop at a faster-than-expected pace.

 

Fed officials don’t appear ready to translate that framework into an explicit promise to keep the central bank’s key overnight lending rate in its current range of 0% to 0.25% until certain economic benchmarks - say, 2.5% inflation - are met.

 

The rate-setting Federal Open Market Committee is scheduled to release its policy statement and a summary of fresh economic projections at 2 p.m. EDT (1800 GMT). Fed Chair Jerome Powell is due to hold a virtual news briefing half an hour later.

 

 

·         UK inflation fell but by less than expected in August

British inflation fell by less than expected in August when consumer prices rose by 0.2%, official data showed on Wednesday, following a 1.0% rise in July.

A Reuters poll of economists had pointed to a reading of 0.0% as the government’s subsidies for people eating out last month helped push down the headline inflation rate.

 

·         UK sees 'a way through' parliamentary maze for Brexit treaty breach bill

British Prime Minister Boris Johnson’s government sees a ‘way through’ the parliamentary maze for his bill that would break the Brexit divorce treaty as it talks with rebels in the Conservative Party, a minister said on Wednesday.

Johnson’s Internal Market Bill, which the EU has demanded he scrap by the end of September, is currently being debated in parliament, though he is facing a rebellion by some members of his Conservative Party.

“I believe there is a way through,” Robert Buckland told the BBC when asked about negotiations with rebels in parliament over the bill, adding that London wanted a deal with the EU.

 

·         Japan's Suga elected as country's first new PM in eight years

Yoshihide Suga was elected as Japan’s prime minister on Wednesday, becoming the country’s first new leader in nearly eight years and facing a raft of challenges including reviving an economy battered by the COVID-19 crisis.

Suga, who served as chief cabinet secretary to outgoing premier Shinzo Abe, was voted in by the lower house of parliament where his ruling Liberal Democratic Party holds a majority.

 

 

·         Standard Chartered CEO says Hong Kong is ‘very, very safe’ as a banking center

 

Hong Kong’s position as global financial center remains “very, very safe” even as the city is caught up in escalating tensions between the U.S. and China, according to Standard Chartered’s Chief Executive Bill Winters.

 

“The fact is Hong Kong is sitting here as the gateway to China for capital into China and out of China. That’s only become more clear,” Winters, who’s attending the virtual Singapore Summit, told CNBC’s “Street Signs Asia” on Wednesday.

 

 

·         Hurricane Sally shifts from offshore U.S. oil fields, heavy rains to damp fuel demand

 

Hurricane Sally crawled offshore along the U.S. Gulf Coast on Wednesday, moving away from oil fields while soaking the region with heavy rains that could damp fuel demand in the U.S. southeast.

 

The hurricane has shut more than a quarter of U.S. offshore Gulf of Mexico oil and gas production and stirred heavy seas that closed ports from Louisiana to Florida. It moved at a snail’s pace toward a Wednesday landfall on the coast between Mississippi and Florida.

 

 

·         WTI: Selling opportunity at 38.70

 

WTI Crude

WTI Crude September Future beat strong resistance at 37.80/38.00 to target a selling opportunity at 38.70/39.00, with stops above 39.40.

 

Daily Analysis

 

WTI Crude shorts at selling opportunity at 38.70/39.00 target 38.40/30 with first support at 38.00/37.80. A break below 37.60 targets 37.20/30. Below 37.10 look for 36.80/70 before support at 36.00/35.80. A break below 35.40 is the next sell signal initially targeting 34.60/40.

 

Selling opportunity at 38.70/39.00, with stops above 39.40. A break higher targets 39.85/40.00.

 

 

·         Oil jumps as hurricane hits U.S. output while crude stocks decline

 

Oil prices rose for a second day on Wednesday, gaining more than 2%, as a hurricane closed U.S. offshore oil and gas production and an industry report showed U.S. crude inventories decreased.

 

Brent crude LCOc1 rose 85 cents, or 2.1%, to $41.38 a barrel by 0645 GMT, while U.S. crude CLc1 rose 92 cents, or 2.4%, to $39.20. Both contracts rose by more than 2% on Tuesday.

 

More than 25% of U.S. offshore oil and gas output was shut and export ports were closed on Tuesday as Hurricane Sally sat just off the U.S. Gulf Coast.

 

Reference: CNBC, Reuters