Fed May Nod to December Hike in 2015 Rerun: Decision-Day Guide
The Federal Reserve is widely expected to leave interest rates unchanged when it concludes its two-day meeting on Wednesday, though it may well signal an increase is likely when officials meet next in December.
The rate-setting Federal Open Market Committee will issue a statement at 2 p.m. in Washington to explain its decision. There is no scheduled press conference with Fed Chair Janet Yellen afterward, and there will be no update to policy makers’ economic projections. Here’s what to watch for:
In a repeat of the way it prepared the public for a rate hike last December, the FOMC may decide to amend its statement to signal that is assessing whether it will “be appropriate to raise the target range at its next meeting.” The current language lists a number of factors officials are assessing “in determining the timing and size of future adjustments” without any reference to a specific time frame.
“I’d expect a little strengthening of the signal about a rate hike in December,” said Jonathan Wright, an economics professor at Johns Hopkins University in Baltimore. “They might explicitly refer to the decision about raising the target at the next meeting, as they did in the October 2015 statement.”
None of the 90 economists surveyed by Bloomberg expect a rate increase this week. Investors also see little chance of a move, according to the prices of federal funds futures contracts, though they view the probability of a rate hike before year end as roughly two in three.
Another thing that probably won’t change much from the FOMC’s most recent statement, issued in mid-September: the number of committee members dissenting from the decision.
At that meeting, Cleveland Fed President Loretta Mester, Boston Fed President Eric Rosengren and Kansas City Fed President Esther George dissented against the decision to leave rates unchanged, as all three favored an increase. That was the most in nearly two years.
370 top economists publish scathing letter against 'dangerous, destructive' Trump
Eight Nobel laureates joined 362 other economists in an open letter arguing that Americans should not vote for Donald Trump.
The letter, released Tuesday and reported on by the Wall Street Journal, lists 13 economic arguments against Trump, but does not specify which (if any) candidate voters choice in lieu of the Republican nominee.
"Donald Trump is a dangerous, destructive choice for the country. He misinforms the electorate, degrades trust in public institutions with conspiracy theories, and promotes willful delusion over engagement with reality," the economists write, according to a copy posted online by the Journal.
"If elected, he poses a unique danger to the functioning of democratic and economic institutions, and to the prosperity of the country. For these reasons, we strongly recommend that you do not vote for Donald Trump," the letter concludes.
Buy Gold No Matter Who Wins the Election, HSBC Says
There's one certain winner of next week's presidential election, according to HSBC Holdings Plc: investors in gold.
Although they deem a Donald Trump victory more supportive for the price of the metal than a win by Hillary Clinton, the bank's Chief Precious Metals Analyst James Steel says it'll enjoy at least a 8 percent jump whoever wins the race.
Both candidates have espoused trade policies that could stimulate demand, with gold offering a potential "protection against protectionism," he says. Even the relatively more internationalist Democratic candidate has argued for the renegotiation of longstanding free-trade agreements. That's positive for gold — even if "not on the scale of Mr Trump’s agenda."
If the real-estate magnate triumphs, gold could rise to $1,500 an ounce, according to HSBC, up from around $1,289 at 10:55 a.m. in New York.
If Clinton wins, the price of the metal could improve to $1,400 an ounce by year end, Steel writes, adding that a Democratic sweep of Congress would further stoke demand for the metal owing to a possible boost in fiscal spending. Clinton's not alone in having suggested stimulus through channels outside of monetary policy, with Trump at one point saying he would put at least half a trillion dollars to work.
Oil extends losses after report shows surprise U.S. stocks build
Crude oil prices fell for a fourth day on Wednesday, as jittery investors awaited official U.S. stockpile figures later in the day after industry data showed a surprise build in inventories, underlining a persistent global glut.
The American Petroleum Institute said crude stockpiles rose by 9.3 million barrels in the week to Oct. 28, more than nine times the amount expected by analysts polled by Reuters. [API/S]
U.S. West Texas Intermediate crude CLc1 had fallen 42 cents, or 0.9 percent, to $46.25 by 0740 GMT. On Tuesday, it dipped 19 cents to $46.67. Brent crude LCOc1 was down 32 cents at $47.82, near a one-month low of $47.72 hit in the prior session.
Japan's Nikkei share average fell to a two-week low on Wednesday as worries over the U.S. presidential election prompted a recoil in global markets, with a stronger yen adding to the cautious mood.
Reference: Reuters,Bloomberg,CNBC
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