Rates Fall Ahead of Fed Rate Decision and Increased Coronavirus Containment Efforts

 

FOMC will release their rate decision this afternoon. The market expects no change to the benchmark borrowing rate, as the economic outlook has remained steady since the last meeting, but there is a possibility of a change in the IOER (interest rate on excess reserves). After the announcement, Fed Chairman Jerome Powell will hold a press conference to address a plethora of topics that could include asset purchases in the repo market and any future changes to the bank’s inflation goal as the FOMC reviews their broader monetary policy approach.

 

 

The coronavirus continues to spread as the US increases its containment efforts. Confirmed cases in China have grown to 6,000, now greater than the 2003 SARS outbreak. Virus related deaths have increased to 132, and countries are increasing restrictions on travel to China. Airlines such as British Airways are stopping flights to the country immediately, and the US is expanding health screens to 20 airports across the country. Despite these global efforts, new cases continue to emerge as the UAE confirmed their first. Economists predict that these measures could affect China’s GDP growth by up to 6%

 

 

Day ahead. December’s wholesale inventory and trade balance numbers were released this morning — data coming in lower than investor expectations, as inventory numbers decreased 0.1% and trade balance was down $68.3 billion. Pending home sales data will be released later this morning, with median forecasts pointing towards a 0.4% monthly rise. Goldman Sachs will host their first investor day, theoretically lessening the historic mystery regarding their shareholder returns and consumer business. Facebook, Microsoft, and Tesla are among the companies reporting earnings today.