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Equities Race Ahead, Dollar Slips

Posted by Joseph Trevisani on Sep 19, 2017 6:29:16 PM

The Dow notched its ninth record close in a row, the S&P 500 and the Nasdaq set all-time highs and the dollar and Treasury prices moved slightly lower as the Federal Reserve began a scheduled  two-day meeting that is not expected to produce any changes in monetary policy.

U.S. President Donald Trump addressed the U.N. General Assembly with a forceful speech that characterized the nuclear deal with Iran as an "embarrassment" to the United States and warned North Korea against threatening the West. The speech had little impact on global markets.

The dollar faded against all of its G-10 counterparts except the Swiss Franc while the euro rose for a fourth day and the pound traded around 1.3500 following a report that Foreign Secretary Boris Johnson, one of the main supporters of Britain leaving the European Union, might resign if Prime Minister Theresa May resisted his Brexit demands.

Federal Reserve policy is widely anticipated to remain unchanged tomorrow with the Fed Funds upper target continuing at 1.25 percent. 

Market focus will be on the central bank’s approach to unwinding its $4.5 trillion balance sheet acquired in the aftermath of the 2008 financial crisis.  In keeping with the deliberate speed of its  rate hikes, just four since December 2015, the Fed is expected to let most of the securities reach maturity rather than selling them into the credit market. 

Seventy six- percent of respondents in a CNBC poll said they expected the Fed to hike in December. That is considerably higher than the 45 percent chance of a hike priced into the overnight swaps market. 

Joseph Trevisani

Chief Market Strategist


Charts: Thomson/Reuterssept 19.png




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