Financial Markets Remain Tepid Ahead of Fed Decisions

Calm Before the Storm

Investors traded cautiously during Tuesday’s session in anticipation of a number of potentially market moving releases on the schedule for the remainder of this week.  Tomorrow the FOMC will conclude its two-day meeting, where it is widely expected that the committee will hold existing monetary policy unchanged.  The statement released afterwards will be under much scrutiny, with investors hoping to gain further insight into the Fed’s view of current economic conditions.  Also set to be released tomorrow is the text of the GOP’s proposed tax bill, in which the timing for corporate tax cuts will headline a broad spectrum of debatable topics.  Then on Thursday financial markets will be geared up for the announcement of President Trump’s nomination for the next Fed Chair, with Jerome Powell currently maintaining his status as favorite.  The Labor Department’s employment report for October will round out the week on Friday, where a 325,000 addition to nonfarm payrolls is expected along with the unemployment rate remaining at 4.2%.

 

 

All three major US stock indices posted modest gains on the day, up 0.1%-0.4%, as positive corporate earnings continue to be the norm for Q3 reporting.  US Treasurys held within a tight range throughout the trading session, with the 10-year note yield edging 1bp higher to 2.38%.  The dollar also inched higher, climbing 0.1% against major currencies.  The British pound has the potential to see its biggest movement on Thursday following the BOE decision, which could include the central bank’s first rate hike in ten years.

 

 

A Catalan in Belgium

Speaking at a conference in Brussels earlier today, former Catalan leader Carles Puigdemont informed the public that the fleeing of his home country was not a move to escape justice, rather an attempt to have his voice heard in the capital of Europe amid the recent independence crisis in Catalonia.  Over the weekend, Spain’s central government effectively seized control of the region and criminally charged Puigdemont and his officials with rebellion, sedition and embezzlement – charges that if found guilty, could land Puidgemont in prison for up to 30 years.  The former Catalan leader described the charges as groundless and maintained that going forward his group would “reveal to the world the serious democratic deficit that exists in the Spanish state.”