This Week: Housing starts, Fed meeting, CarMax earnings

Andrew Cummings
September 18, 2017

Asian stock markets rose Monday as investors looked ahead to a U.S. Federal Reserve policy meeting and President Donald Trump's speech at the United Nations. Singapore added nearly one percent, with Seoul jumping 1.4 percent and Taipei up 0.5 percent. "We could be experiencing what's known as a robust return environment", said Ronald Sanchez, chief investment officer at Fiduciary Trust Company International in NY.

However, long-term yields in the USA are not immune to the effect of low-yielding bonds in other developed countries like Germany and Japan. On Wednesday, the Fed will release its interest rate decision, its monetary policy statement and economic forecasts.

Markets are now pricing in a more than 50 percent chance of a Fed hike by the end of the year, up from only around a 40 percent chance less than a week ago, according to CME FedWatch, having brought forward their bets after a strong United States inflation print last week.

'Ongoing balance sheet reduction at the same time fed funds rate hikes continue at the same pace as this year might be too much tightening too soon for the expansion to bear without adverse consequences.'
The storms could make it harder for a few months to get a good read on growth and inflation, but the longer term trends are the same. "I think she (Yellen) will need a little more evidence on the inflation side over the next month or two to have some conviction about moving rates in December", Sanchez said. It is widely expected that the central bank won't raise interest rates in the meeting, but investors are expecting the Fed to announce the unwinding of its 4.5-trillion-U.S. -dollar balance sheet. On Wall Street, the futures for the Dow Jones industrial average and for the Standard & Poor's 500 were up 0.2 percent. The tech-heavy Nasdaq rose 0.3 percent to 6,465.75.


Economic bellwether FedEx Corp. reports quarterly financial results after the US stock market closes. Northrop's shares inched up 1.54percent. Advancing issues outnumbered declining ones on the NYSE by a 1.37-to-1 ratio; on Nasdaq, a 1.60-to-1 ratio favored advancers. Major chipmaker SK Hynix also finished with a 3.2 percent boost to ₩79,700.

Last week, Canada's competition watchdog said it would not challenge a proposed merger between the two companies. Brent crude, used to price worldwide oils, rose 11 cents to $55.73 in London.

The broader All Ordinaries index gained 0.40 percent to finish at 5,779, led by financials with the big four banks rising between 0.5 percent and 1.1 percent. The benchmark S&P/ASX 200 index rose 0.45 percent to 5,720.60, snapping three straight sessions of losses.

THURSDAY: The Federal Reserve releases data on USA households' net worth for the second quarter.


Methanex Corp rose 3.6 percent to C$63.80 after TD raised its price target on the stock.

The CME Group's tracker of investor sentiment puts the likelihood of a rate hike by December at 57 percent.

Canada's benchmark stock index notched a gain of more than 1 percent last week.


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