Wednesday preview: Federal Reserve rate decision in the spotlight
All eyes will be on the Federal Open Market Committee today as rate-setters in the US meet to decide on whether (or not) to hike the country's official short-term interest rates for a ninth time in the current tightening cycle.
Over the past few weeks, the market-implied odds of another tightening move have been receding and, as of Wednesday, Fed funds futures were assigning a probability of just 72% to a 25 basis point hike in the Fed funds target range on Wednesday, which would take it to between 2.25%-2.50%.
Historically, such odds are not consistent with a hike.
In any case, and just as important, in parallel Fed funds futures have slowly been pricing-out the prospect of any further hikes in 2019, when just a couple of months ago they had been pointing towards between one and two more hikes.
Hence, just as important as the actual decision on Wednesday will be policy-makers' so-called 'dot-plot' diagram, which is published alongside the policy statement, where they lay out what they each believe is the most likely number of hikes that markets should expect over the next three years.
As of late September, when they last raised the target range, the median projection for the Fed funds rate from the members of the Fed board and the presidents of its 12 regional banks was for between three and five more 25 basis point interest rate hikes by year-end 2019.
Then again, that was also when the Fed chairman, Jerome Powell, and many of his colleagues, believed that interest rates were still "far" from neutral.
Wednesday December 19
INTERIMS
Begbies Traynor Group
INTERIM DIVIDEND PAYMENT DATE
Alpha Financial Markets Consulting, Creightons
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Diversified Gas & Oil, Royal Dutch Shell 'A', Royal Dutch Shell 'B'
QUARTERLY EX-DIVIDEND DATE
General Electric Co
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Crude Oil Inventories (US) (15:30)
Current Account (US) (13:30)
Existing Home Sales (US) (15:00)
MBA Mortgage Applications (US) (12:00)
Producer Price Index (GER) (07:00)
AGMS
British Empire Trust, Frontier IP Group, JPMorgan Elect Managed Growth Shares, Proactis Holdings, Red Rock Resources
UK ECONOMIC ANNOUNCEMENTS
Consumer Price Index (09:30)
Producer Price Index (09:30)
Retail Price Index (09:30)
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Aberdeen Frontier Marke