Mid-Week Market Minute 9.20.23

Federal Reserve News Conference Today; Housing Data

Stocks around the globe treaded water in early trading this week ahead of Wednesday afternoon’s interest-rate decision from the Federal Reserve. It is widely expected the Fed will pause rate increases and keep borrowing costs in a range of 5.25% to 5.5% at the conclusion of the meeting. Any deviation from this would be certain to move markets one way or another. In addition to the interest rate decision, Fed Chair Jerome Powell will hold a news conference at 1:30 p.m. Central. Here, the markets will be looking for signs into the future path of Fed policy as the central bank releases updated economic and inflation projections. Interest rates have been trending higher since the last FOMC meeting at the end of July, with the 2-year and 10-year Treasury notes currently trading around 5.07% and 4.33%, respectively. The recent combination of a stronger than expected economic backdrop paired with higher oil prices have been the primary drivers, leading investors to believe higher interest rates may be around longer than once anticipated.

Outside of the FOMC meeting, there are three pieces of economic data we are watching this week. The first is housing starts and permits, reported on Tuesday, where housing starts came in well below expectations, reflecting in part the toll of higher mortgage rates. On the positive side, a jump in permits reflects optimism for the future, supported by the lack of homes on the market. The other data points worth noting are Canadian and UK inflation. Canadian CPI unexpectedly rose this week as headline CPI in Canada increased from 3.3% to 4.0% annualized, above expectations. On the flip side, UK inflation was reported at 6.7%, much better than the consensus of 7.1%. As investors evaluate the path forward for the global economy, this non-U.S. inflation data gives us additional data points to consider.  

Source: GSAM, CNBC, JPMorgan

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