Futures flat as investors focus on Fed meeting

Saturday, 23 Sep, 2017

It has also trimmed its inflation forecast. Month-on-month the growth rate was 1% compared to expectations of 0.2% growth, while year-on-year the increase was at 2.4%. The contract fell 14 cents, or 0.3 percent, to settle at $50.55 a barrel on Thursday.

The treasury yield curve shifted upwards as a result, with the 10-year treasury yield climbing from 2.24% to 2.27%.

Some Fed officials have questioned whether the central bank should continue raising rates, which it typically does to forestall inflation, at a time when price growth remains so low.

U.S. Treasury prices were little changed Thursday, leaving the 2-year Treasury yield near an nearly nine-year high after the Federal Reserve on Wednesday indicated that it still plans to deliver another rate increase in 2017.

"The most important thing Yellen needed to communicate to the market was that the bond sale plan and rate increases are not on autopilot", said Jason Pride, director of investment strategy at Glenmede in Philadelphia.

All the easy money sloshing around on financial markets burnished bullion's reputation as a hedge against inflation and as a storer of wealth amid the debasement of paper currencies sending gold to an all-time nominal high above $1,900 an ounce by August 2011.

"If you model it out, over about the next three years they'll take out about $1.3trn or so".

It comes as the United States central bank announced that after almost a decade it would actually start to cut the size of its $4.5 trillion asset portfolio starting this October. It is also expected to announce how the presumably very gradual unwinding of its vast, $4.5 trillion balance sheet will be structured in the months and years ahead. The initial cut will be $10 billion per month, probably beginning in October. The Dow gained 63.01 points, or 0.3 percent, to 22,331.35. Inflation has been stubbornly low for years, suggesting the Fed should hold off.

The central bank said Hurricanes Harvey, Irma, and Maris were expected to affect U.S. economy in the near term, while they would not alter the course of the economy in the medium term.

At 2:00 pm ET, the Federal Reserve will announce its decision on monetary policy. As the BIS said, "transparency about the path of central bank measures may unintentionally encourage greater risk-taking in markets". The long-run fed funds rate is now expected to be 2.75 percent instead of 3.00 percent.

"The market could throw a little bit of a fit if they push (balance sheet reduction) back".

Outside Asia, U.S. stocks traded slightly higher with the S&P 500 gaining 0.1% on Tuesday while the Dow Jones industrial average rose 0.2%.

THE FED: Investors have their eye on the Federal Reserve, which was holding a two-day meeting of its policymakers. Such a move by the Fed would likely push long-term interest rates up.

The question of when and how the Fed will manipulate its main policy lever - its target for short-term rates - in coming months is less clear.

USA stocks traded higher on Wednesday, as the Federal Reserve signaled that a third rate interest rate increase was likely this year.