FOMC shaping this week’s development

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The FOMC outcome on Thursday, midnight Singapore time, will be the main dish for the week as equity markets trade restless, swinging between gains and losses without a clear direction.

There is a broad-based consensus that the Fed will not raise interest rates in this meeting. The focus will be on the economic projection as they will hint at the Fed’s insights into the general economy.

Both the Doves and Hawks could win.

If we take a page out of Uncle Powell’s speech at the central bank annual summit in Jackson Hole, he appeared to meet the expectations of both the hawks and doves with a focus on fighting inflation but remained vague on the possibility of raising the interest rate. It was the “data dependent” statement. It pretty much works.

Since that move works, we could expect Uncle Powell to maintain a neutral stance again and hint at elevated interest rates for a longer period without committing to another possible rate hike.

So what can we expect?

We should expect the Fed to hold interest rates steady, which means maintaining the feds fund rate between 5.25% – 5.5%, similar to the level in last July’s meeting.
There could be a hint and open door policy to a 25 basis point hike for its remaining two meetings of the year.
The Fed’s dot plot forecast may signal another rate hike, but that does not mean the Fed will have to exercise it if progress on inflation and the labour market continues on a weaker front.

What’s on the menu today?

8.30 pm : Building Permits (MoM) for August.

It is 19 September, Tuesday, 8.45 am in Singapore and 8.45 pm in New York. The markets remain chopping. We could have exited our risky positions but were faced with some options and strategy obstacles and will attempt today to look into offloading more positions.

Stay safe and nimble in your trades as we share the latest trends in our Live Market channel.