Daily Market Color October 27, 2015Bid for Safer Assets Continues Ahead of Fed Meeting Stocks declined with oil while Treasury yields and swap rates rallied as investors continued to shy away from riskier assets ahead of the FOMC. The Fed isn’t expected to tighten this week (only 6% implied probability), but the statement may provide insight into the committee’s thinking as it relates to China’s economic slowdown and slumping oil prices. US natural gas traded below $2 for the first time since 2012, and WTI continues to slide below the $50 threshold, heightening global deflation fears. The Fed is likely to acknowledge these concerns with certain tweaks in the language, but it would be a big surprise if they explicitly ruled out a hike at the December meeting. In addition to Fed speculation, investors had their hands full with a bevy of corporate earnings and a moderate amount of economic data. All eyes are on Apple’s earnings after the close, where its sales in China and forecast for the holiday-season will be closely scrutinized. Other companies reporting after the close include Panera Bread, Twitter, and Gilead Sciences, among others. Today’s US data did little to alleviate concerns that China’s slowdown may be impacting growth domestically. A report showed durable goods ordered declined in September while the August number was downwardly revised, the latest sign of weakness for the US factory sector. A key gauge of business investment spending also unexpectedly declined in the same report. Economists from JPMorgan, Barclays, and Morgan Stanley all reduced their GDP estimates as a result. A separate report showed consumer confidence also unexpectedly declined this month. In a rare example of bipartisanship, the White House and congress agreed to a tentative budget deal that would suspend the debt ceiling until March 2017 and set government spending levels for the next two years. Without a deal, the federal government would move into default next week when the Treasury Department is no longer able to borrow, which would likely be by next Tuesday. Further negotiating remains necessary to avoid a government shutdown when current funding expires on December 11, but the tentative agreement is a step in the right direction.