Five Things You Need to Know to Start Your Day
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It’s Fed day, no deal on bipartisan Obamacare fix, and pound rallies on strong retail sales. Here are some of the things people in markets are talking about today.
At 2 p.m. Eastern Time the Federal Reserve will publish its latest monetary-policy decision. While markets are expecting no change to rates, investors will be looking for details on how the central bank intends to start shrinking its $4.5 trillion balance sheet as well as the so-called dot plot, which indicates the path ahead for interest-rate increases. The announcement will be followed 30 minutes later by a press conference with Chair Janet Yellen. Market futures show a rate hike by the end of the year is seen as a coin-flip by investors.
No bipartisan health deal
Efforts to advance a small package of measures to repair Obamacare have failed to secure enough support to proceed, according to Tennessee Republican Senator Lamar Alexander. The GOP continues to struggle for the votes needed to pass a wider package of ‘repeal and replace’ measures while time is running out for a resolution. Senator John McCain is still withholding his support on the latest plan, which is opposed by doctors and hospitals.
Retail sales jump
The British pound rallied after U.K. retail sales rose at the fastest pace in four months in August at 1.0 percent, well ahead of the expected 0.2 percent increase. The data will increase speculation that the Bank of England may raise rates in the coming months. Officials at the bank gather this week for their quarterly financial stability meeting, with the rapid increase in consumer debt – currently rising five-times faster than incomes – likely to be among the main topics for discussion.
Equity markets across the world remain quiet ahead of the Fed’s decision. Overnight, the MSCI Asia Pacific Index rose 0.2 percent, while Japan’s Topix index was little changed. In Europe, the Stoxx 600 Index was unchanged at 5:40 a.m., and S&P 500 futures were also holding steady. The 10-year Treasury yield was at 2.225 percent and gold was up $9 an ounce.
Hurricane Maria is expected to hit Puerto Rico today after battering the storm-ravaged Caribbean island nation of Dominica overnight. The storm is forecast to be a Category 5 hurricane when it makes landfall. Mexico City was struck by a 7.2 magnitude earthquake yesterday, leaving at least 248 dead on the 32nd anniversary of the 1985 quake that killed more than 5,000.
What we've been reading
This is what's caught our eye over the last 24 hours.
- It’s not just Toys ‘R’ Us. More credit weak spots are emerging.
- Volkswagen comeback pushes Europe bond sales past one trillion euros.
- Facebook to be called before Senate panel on Russian meddling.
- Iron ore sinks after getting hit by a barrage of bad news.
- Bitcoin could split again in November.
- ECB monetary policy is actually working.
- Bill Gross, former bond king.