Federal Reserve Rate Decision Preview
The Fed Futures market has priced in a 90 percent probability of a 25-basis point cut, to 1.5 to 1.75 percent. What will be more important than the all but certain cut will be the Fed’s future indication. The economic data remains strong while trade tensions and Brexit are still up in the air. The combination makes the outlook for the Fed somewhat uncertain.
Federal Reserve Rate Decision Preview
The Federal Open Market Committee will be releasing minutes from the September meeting later today. Last month the Fed cut rates by 25 basis points for the second time this year. On Tuesday Fed Chair Jerome Powell had a presser and Q and A session. During the presser he told reporters that the Fed would start to grow its balance sheet again.
ISM Non-Manufacturing PMI Shines Some Light on the US Economy
The Institute for Supply Management’s (ISM) Non-Manufacturing PMI report shows that economic activity in the United States service sector beats expectations, 56.4 actual vs 54 expected, and a significant improvement from July’s reading of 53.7. Non-Manufacturing PMI is coming off a 2-month slowdown, this data point is a sign of strength for the US service sector.
Gold Price Slides as Retail Sales Gives Hope to the U.S. Economy
Retail sales increased by 0.7 percent in July compared to a month prior, significantly better than what economists expected. Retail sales measures purchases at stores, restaurants and online. If you exclude auto sales and gas, retail sales were up 1.0 percent in July. In the May though July period, consumer spending increased by a whopping 1.8 percent when compared to the three months prior.
Fed Preview: What Comes After the 25-Basis Point Cut?
The FOMC has changed gears and has indicated they are ready to start cutting rates, the first down move since 2008. In today’s meeting is all but certain that we will see a 25-basis point cut, the 50-basis point cut is basically off the table.
Consumer Sentiment Shows Americans Still Have a Positive Outlook
US consumer sentiment improved by a thin margin with the index increasing from 98.2 in June to 98.4 in July. This increase was in line with forecast and marks 5 months of the index staying within a 2.8-point range. Earlier last year marked the highest consumer sentiment since 2004 and we are slowly creeping towards that figure again.
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