Originally published by Rivkin Securities
The main event of last night was the second last Federal Open Market Committee (FOMC) meeting for the year to decide interest rates in the US for the next six weeks. Economists and markets didn’t expect any change in rates at this meeting although all eyes were on the statement for indications as to whether the October market sell-off would factor into the FOMC’s thinking. As this wasn’t mentioned, and the statement reiterated the gradual rate hike path, markets took the statement as slightly hawkish and reacted accordingly. Stocks fell with the S&P 500 closing down 0.25% although the losses could have been worse if it weren’t for a late date rally. The US dollar index rose 0.5% which moved it back towards an 18-month high. The odds for a December rate hike are still very high with the CME Fedwatch tool suggesting a 75% chance of a 25-basis point hike.
Oil prices continue to decline and are now officially in a bear market, having declined 20% from their peak. Inventories have been rising over the past few weeks (although this is normal for this time of year) and sanctions on Iran are so far proving to be less severe than first thought. This is partly because the US has now issued waivers to a raft of countries although these are currently set to expire in six months. Notwithstanding the waivers, Iranian crude exports are still expected to decline by as much as one million barrels per day. WTI oil is currently priced at US$60.72 per barrel.
Today the RBA releases its quarterly monetary policy statement which gives some insight into the bank’s thinking for economic growth and monetary policy. Tonight, the UK will release its GDP data for the month of September. ASX 200 futures are down 9 points.
- RBA Monetary Policy Statement 10:30am AEST
- UK GDP Data 7:30pm AEST
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