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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/sep/20/us-federal-reserve-decision-janet-yellen-markets-uk-retail-business-live
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| Version 17 | Version 18 |
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| US Federal Reserve interest rate decision – live! | US Federal Reserve interest rate decision – live! |
| (35 minutes later) | |
| 6.47pm BST | |
| 18:47 | |
| Oliver Jones of Capital Economics predicts that the Fed will sound more dovish about interest rates today. | |
| He suspects they will drop the notion of another rate hike in 2017, and push it into 2018. | |
| Jones writes: | |
| While the federal funds rate is almost certain to stay on hold on this occasion, updates to FOMC members’ median forecasts – which are currently for one more rate hike this year and three further three hikes in 2018 – will be closely scrutinised as usual. | |
| Although we no longer expect the Fed to raise rates again in 2017, we are still expecting four rate hikes in 2018 as inflation rebounds. | |
| 6.35pm BST | |
| 18:35 | |
| Wall Street is becalmed, with less than 30 minutes until the Fed announcement, which is followed by Janet Yellen’s press conference. | |
| The Dow Jones industrial average is up 2 points, or a measly 0.01%, having hit a record high last night. | |
| 6.20pm BST | |
| 18:20 | |
| Do play along with Fed Bingo at home, or in the office. | |
| it's #Fed Bingo day. Statement and press conference both count. Your caller is Janet #Yellen . Eyes down for a full house! pic.twitter.com/RUWmICwJW4 | |
| 6.15pm BST | 6.15pm BST |
| 18:15 | 18:15 |
| Fingers crossed, and seatbelts buckled, please.... | Fingers crossed, and seatbelts buckled, please.... |
| We've had 13 Fed tightening cycles, with 10 ending in recession, and 3 soft landings. "So let's pray for a soft landing" - Rosenberg, @CNBC | We've had 13 Fed tightening cycles, with 10 ending in recession, and 3 soft landings. "So let's pray for a soft landing" - Rosenberg, @CNBC |
| 6.14pm BST | 6.14pm BST |
| 18:14 | 18:14 |
| What to watch for from the Fed today | What to watch for from the Fed today |
| Today’s meeting of the Federal Open Market Committee is one of the most eagerly anticipated in a while. But what will Wall Street, the City, and investors around the world be looking for - and what will it mean for the rest of us? | Today’s meeting of the Federal Open Market Committee is one of the most eagerly anticipated in a while. But what will Wall Street, the City, and investors around the world be looking for - and what will it mean for the rest of us? |
| 1) Will the Fed raise interest rates today? Spoiler alert: this is seen as very unlikely. We’ve already seen two US interest rate rises this year, and American inflation probably isn’t bubbling away enough to justify a third today. | 1) Will the Fed raise interest rates today? Spoiler alert: this is seen as very unlikely. We’ve already seen two US interest rate rises this year, and American inflation probably isn’t bubbling away enough to justify a third today. |
| 2) So when will rates go up? Previously, the Fed has predicted it will raise borrowing costs three times in 2017, and it has already hiked in March and June. | |
| Today, it will release a new Dot Plot, showing how policymakers expect borrowing costs to move. If they don’t change 2017’s dots, and they don’t hike today, then a December hike would remain possible (but not certain). | |
| Odds of another Fed rate hike this year now about 50:50 ahead of FOMC meeting. pic.twitter.com/7i1ZdbWpkC | Odds of another Fed rate hike this year now about 50:50 ahead of FOMC meeting. pic.twitter.com/7i1ZdbWpkC |
| Consensus anticipates #Fed normalization w/unchanged ’17 dots. ’18 & ’19 dots could shift lower while language may turn slightly more dovish pic.twitter.com/HXSCpTayLE | Consensus anticipates #Fed normalization w/unchanged ’17 dots. ’18 & ’19 dots could shift lower while language may turn slightly more dovish pic.twitter.com/HXSCpTayLE |
| 3) Is it time to unwind the stimulus, and how? The big news from today’s meeting will probably centre on the Fed’s plans to normalise monetary policy and trim its $2.45 trillion balance sheet. | 3) Is it time to unwind the stimulus, and how? The big news from today’s meeting will probably centre on the Fed’s plans to normalise monetary policy and trim its $2.45 trillion balance sheet. |
| That balance sheet swelled during the Fed’s various QE stimulus programmes, mopping up hundreds of billions of dollars of government and mortgage-backed bonds. | That balance sheet swelled during the Fed’s various QE stimulus programmes, mopping up hundreds of billions of dollars of government and mortgage-backed bonds. |
| It's go time for the Fed https://t.co/18DI9StR1J pic.twitter.com/Ib8IkF160b | It's go time for the Fed https://t.co/18DI9StR1J pic.twitter.com/Ib8IkF160b |
| Economists predict that the Fed will announce that it will start unwinding this programme. But it may be reluctant to move fast. One option is to stop buying new bonds when existing debt matures. | Economists predict that the Fed will announce that it will start unwinding this programme. But it may be reluctant to move fast. One option is to stop buying new bonds when existing debt matures. |
| The Fed is the first of the Big Four central banks to reach this point, so it is treading a path which the ECB, the Bank of Japan and the Bank of England will hope to follow. | The Fed is the first of the Big Four central banks to reach this point, so it is treading a path which the ECB, the Bank of Japan and the Bank of England will hope to follow. |
| 4) What’s the hurricane damage? New economic forecasts will be released today, which may attempt to quantify the impact of hurricanes Harvey and Irma. | 4) What’s the hurricane damage? New economic forecasts will be released today, which may attempt to quantify the impact of hurricanes Harvey and Irma. |
| 5) Yellen’s future in focus. Janet Yellen’s first term as Fed chair ends in early 2018. Is she considering running again, or ruling herself out following criticism from Donald Trump? She recently breakfasted with the president’s elder daughter, Ivanka, so reporters will want to hear Yellen’s thinking. | 5) Yellen’s future in focus. Janet Yellen’s first term as Fed chair ends in early 2018. Is she considering running again, or ruling herself out following criticism from Donald Trump? She recently breakfasted with the president’s elder daughter, Ivanka, so reporters will want to hear Yellen’s thinking. |
| 6) How do the markets take it? Investors seem remarkably relaxed about the prospect of QE being unwound, with markets at record highs. But might they have a change of heart when the deed is done? Loose monetary policy has driven asset prices higher for years, so withdrawing it could dent spirits.... | 6) How do the markets take it? Investors seem remarkably relaxed about the prospect of QE being unwound, with markets at record highs. But might they have a change of heart when the deed is done? Loose monetary policy has driven asset prices higher for years, so withdrawing it could dent spirits.... |
| Updated | |
| at 6.22pm BST | |
| 6.06pm BST | 6.06pm BST |
| 18:06 | 18:06 |
| In one hour (18:00 GMT), the Federal Reserve will announce its Interest Rate Decision. The previous value was 1.25% pic.twitter.com/vgqqKG6m4G | In one hour (18:00 GMT), the Federal Reserve will announce its Interest Rate Decision. The previous value was 1.25% pic.twitter.com/vgqqKG6m4G |
| 5.06pm BST | 5.06pm BST |
| 17:06 | 17:06 |
| European markets flat ahead of Fed | European markets flat ahead of Fed |
| World markets are hovering around new highs, with the MSCI All Country World Index up another 0.09% to 487.82. But overall investors are - mostly - sitting on their hands ahead of the latest US Federal Reserve interest rate decision, due in just under two hours. | World markets are hovering around new highs, with the MSCI All Country World Index up another 0.09% to 487.82. But overall investors are - mostly - sitting on their hands ahead of the latest US Federal Reserve interest rate decision, due in just under two hours. |
| The exception, as previously mentioned, is the Spanish market, which has been rattled by the tensions in Spain surrounding a proposed independence referendum for Catalonia. The final scores showed: | The exception, as previously mentioned, is the Spanish market, which has been rattled by the tensions in Spain surrounding a proposed independence referendum for Catalonia. The final scores showed: |
| The FTSE 100 finished down 3.3 points or 0.05% at 7271.95 | The FTSE 100 finished down 3.3 points or 0.05% at 7271.95 |
| Germany’s Dax edged up 0.06% to 12,569.17 | Germany’s Dax edged up 0.06% to 12,569.17 |
| France’s Cac climbed 0.08% to 5241.66 | France’s Cac climbed 0.08% to 5241.66 |
| Italy’s FTSE MIB fell 0.31% to 22,355.58 | Italy’s FTSE MIB fell 0.31% to 22,355.58 |
| Spain’s Ibex ended 0.83% lower at 10,292.1 | Spain’s Ibex ended 0.83% lower at 10,292.1 |
| In Greece, the Athens market dropped 0.64% to 757.98 | In Greece, the Athens market dropped 0.64% to 757.98 |
| On Wall Street, the Dow Jones Industrial Average is currently up 0.1% at 22,392. | On Wall Street, the Dow Jones Industrial Average is currently up 0.1% at 22,392. |
| Updated | Updated |
| at 5.35pm BST | at 5.35pm BST |
| 4.20pm BST | 4.20pm BST |
| 16:20 | 16:20 |
| Most European markets (and indeed the US as well) are treading water ahead of the US Federal Reserve meeting. | Most European markets (and indeed the US as well) are treading water ahead of the US Federal Reserve meeting. |
| An exception is Spain, where the Ibex has dropped 1% after growing tensions over the proposed Catalonian independence referendum, with police arresting political officials in Barcelona. David Madden, market analyst at CMC Markets UK, said: | An exception is Spain, where the Ibex has dropped 1% after growing tensions over the proposed Catalonian independence referendum, with police arresting political officials in Barcelona. David Madden, market analyst at CMC Markets UK, said: |
| With the exception of the IBEX 35, it has been an uninteresting day for European indices. Catalonia has been calling for a referendum on independence for some time, and the fragile state of the Spanish economy has exacerbated it. Spanish police have raided the headquarters of the Catalonian government and scenes of unrest on the back of this has weighed heavily on the Spanish market. The move by the Spanish authorities is likely to stoke independence calls, and this spooked investors. | With the exception of the IBEX 35, it has been an uninteresting day for European indices. Catalonia has been calling for a referendum on independence for some time, and the fragile state of the Spanish economy has exacerbated it. Spanish police have raided the headquarters of the Catalonian government and scenes of unrest on the back of this has weighed heavily on the Spanish market. The move by the Spanish authorities is likely to stoke independence calls, and this spooked investors. |
| 3.59pm BST | 3.59pm BST |
| 15:59 | 15:59 |
| Ahead of the US Federal Reserve meeting, here is ING Bank’s crib sheet: | Ahead of the US Federal Reserve meeting, here is ING Bank’s crib sheet: |
| 3.41pm BST | 3.41pm BST |
| 15:41 | 15:41 |
| Oil prices have been moving higher recently on hopes that Opec and its partners would extend their production cuts designed to deal with a global supply glut. Indeed, crude is on track for its biggest third quarter gain in 13 years. | Oil prices have been moving higher recently on hopes that Opec and its partners would extend their production cuts designed to deal with a global supply glut. Indeed, crude is on track for its biggest third quarter gain in 13 years. |
| However they have now come off their best levels after the US Energy Information Administration reported a bigger than expected rise in crude stocks last week. | However they have now come off their best levels after the US Energy Information Administration reported a bigger than expected rise in crude stocks last week. |
| EIA crude inventories up 4.591 million vs 3.493m expected (API reported 1.443m on Tuesday) - #Brent and #WTI off 20c ,minor response #oil | EIA crude inventories up 4.591 million vs 3.493m expected (API reported 1.443m on Tuesday) - #Brent and #WTI off 20c ,minor response #oil |
| 3.27pm BST | 3.27pm BST |
| 15:27 | 15:27 |
| #APPLE is down 2.2%, drags $DJ to flat line. No definite trigger, though new Watch seeing negative reviews (1) ^KO | #APPLE is down 2.2%, drags $DJ to flat line. No definite trigger, though new Watch seeing negative reviews (1) ^KO |
| 3.26pm BST | 3.26pm BST |
| 15:26 | 15:26 |
| Markets continue to drift ahead of the Fed meeting. Connor Campbell, financial analyst at Spreadex, said: | Markets continue to drift ahead of the Fed meeting. Connor Campbell, financial analyst at Spreadex, said: |
| Despite effectively not moving after the bell the Dow Jones still managed to flirt with a fresh all-time high – that’s just how consistent it has been in the last 3 weeks. Whether it can continue to build may be dependent on how the dollar reacts to September’s statement from the Federal Reserve – which in turn could come to depend on a) how cautious Yellen and co. are in regards to reducing the $4.5 billion balance sheet, and b) what kind of (December) rate hike signals are sent out. | Despite effectively not moving after the bell the Dow Jones still managed to flirt with a fresh all-time high – that’s just how consistent it has been in the last 3 weeks. Whether it can continue to build may be dependent on how the dollar reacts to September’s statement from the Federal Reserve – which in turn could come to depend on a) how cautious Yellen and co. are in regards to reducing the $4.5 billion balance sheet, and b) what kind of (December) rate hike signals are sent out. |
| For now, however, the greenback is sitting firmly on its hands. The dollar is down 0.3% against the pound, 0.1% against the yen and flat against the euro. Sterling is also up 0.2% against the euro, the currency receiving a bit of good news in the form of this morning’s surprisingly strong UK retail sales reading. | For now, however, the greenback is sitting firmly on its hands. The dollar is down 0.3% against the pound, 0.1% against the yen and flat against the euro. Sterling is also up 0.2% against the euro, the currency receiving a bit of good news in the form of this morning’s surprisingly strong UK retail sales reading. |
| As for the European indices, sterling’s strength is once again weighing on the FTSE, which slipped 0.2% as the day went on having risen 0.3% during the morning. In the Eurozone there wasn’t a lot going on, with the CAC flat at 5225 and the DAX slipping below 12550 – if only just – following a 0.1% fall. | As for the European indices, sterling’s strength is once again weighing on the FTSE, which slipped 0.2% as the day went on having risen 0.3% during the morning. In the Eurozone there wasn’t a lot going on, with the CAC flat at 5225 and the DAX slipping below 12550 – if only just – following a 0.1% fall. |
| 3.12pm BST | 3.12pm BST |
| 15:12 | 15:12 |
| US house sales fall in August | US house sales fall in August |
| More weak data from the US, with the effects of Hurricane Harvey starting to be felt. | More weak data from the US, with the effects of Hurricane Harvey starting to be felt. |
| US existing home sales fell 1.7% to 5.35m units in August, down from 5.44m in July and the lowest level since this time last year, mainly due to a lack of supply. | US existing home sales fell 1.7% to 5.35m units in August, down from 5.44m in July and the lowest level since this time last year, mainly due to a lack of supply. |
| The National Association of Realtors said Harvey, which hit Texas in the last week of August, had seen helped push sales in Houston down 25% year on year. Without that decline, existing home sales would have been unchanged in August. | The National Association of Realtors said Harvey, which hit Texas in the last week of August, had seen helped push sales in Houston down 25% year on year. Without that decline, existing home sales would have been unchanged in August. |
| Lawrence Yun, NAR chief economist, said: | Lawrence Yun, NAR chief economist, said: |
| Steady employment gains, slowly rising incomes and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales. What’s ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it’s putting on prices in several parts of the country. Sales have been unable to break out because there are simply not enough homes for sale. | Steady employment gains, slowly rising incomes and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales. What’s ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it’s putting on prices in several parts of the country. Sales have been unable to break out because there are simply not enough homes for sale. |
| Some of the South region’s decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area. Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma. However, nearly all of the lost activity will likely show up in 2018. | Some of the South region’s decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area. Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma. However, nearly all of the lost activity will likely show up in 2018. |
| Updated | Updated |
| at 3.15pm BST | at 3.15pm BST |
| 2.37pm BST | 2.37pm BST |
| 14:37 | 14:37 |
| Some deal news from Japan. Reuters reports: | Some deal news from Japan. Reuters reports: |
| Toshiba Corp has agreed to sell its prized semiconductor business to a group led by U.S. private equity firm Bain Capital, a key step in keeping the struggling Japanese conglomerate listed on the Tokyo exchange. | Toshiba Corp has agreed to sell its prized semiconductor business to a group led by U.S. private equity firm Bain Capital, a key step in keeping the struggling Japanese conglomerate listed on the Tokyo exchange. |
| Toshiba said it had signed a contract for the deal worth about 2 trillion yen ($18 billion), the latest and perhaps final twist in a deal that only hours earlier had seen the company leading toward an agreement with its U.S. joint venture partner Western Digital Corp. | Toshiba said it had signed a contract for the deal worth about 2 trillion yen ($18 billion), the latest and perhaps final twist in a deal that only hours earlier had seen the company leading toward an agreement with its U.S. joint venture partner Western Digital Corp. |
| The decision to sell the world’s No. 2 producer of NAND memory chips... was made at a board meeting earlier in the day. | The decision to sell the world’s No. 2 producer of NAND memory chips... was made at a board meeting earlier in the day. |
| Toshiba said the agreement assumed the deal would weather legal challenges raised by Western Digital. A Western Digital spokeswoman said the company did not have an immediate comment. | Toshiba said the agreement assumed the deal would weather legal challenges raised by Western Digital. A Western Digital spokeswoman said the company did not have an immediate comment. |
| 2.34pm BST | 2.34pm BST |
| 14:34 | 14:34 |
| Wall Street opens flat ahead of Fed decision | Wall Street opens flat ahead of Fed decision |
| US investors are in wait and see mode ahead of the Federal Reserve’s interest rate decision and the press conference from chair Janet Yellen. But markets still remain at record levels. | US investors are in wait and see mode ahead of the Federal Reserve’s interest rate decision and the press conference from chair Janet Yellen. But markets still remain at record levels. |
| The Dow Jones Industrial Average and the S&P 500 both edged up 0.01% at the open, while the Nasdaq Composite slipped 0.04%. | The Dow Jones Industrial Average and the S&P 500 both edged up 0.01% at the open, while the Nasdaq Composite slipped 0.04%. |
| 2.13pm BST | 2.13pm BST |
| 14:13 | 14:13 |
| If the US Federal Reserve is more hawkish than expected on interest rates and its balance sheet plans, then the US dollar could move sharply higher after its recent weakness, reckons Fawad Razaqzada, market analyst at Forex.com: | If the US Federal Reserve is more hawkish than expected on interest rates and its balance sheet plans, then the US dollar could move sharply higher after its recent weakness, reckons Fawad Razaqzada, market analyst at Forex.com: |
| In making their decisions, policymakers at the Fed are likely to take into account last month’s sharper-than-expected rise in CPI inflation, and weigh this against somewhat softer macro pointers elsewhere in the economy. But with employment remaining healthy and inflation being so close to its target, the Fed may get the market ready for another rate rise in December and also provide a plan for balance sheet normalisation. In other words, the Fed may be more hawkish than dovish at this meeting. | In making their decisions, policymakers at the Fed are likely to take into account last month’s sharper-than-expected rise in CPI inflation, and weigh this against somewhat softer macro pointers elsewhere in the economy. But with employment remaining healthy and inflation being so close to its target, the Fed may get the market ready for another rate rise in December and also provide a plan for balance sheet normalisation. In other words, the Fed may be more hawkish than dovish at this meeting. |
| If so, we would expect the dollar to rip, especially against currencies where the central bank is still very dovish – for example, the Japanese yen and the Swiss franc. This outcome may also be modestly negative for the US stock markets. If the dollar rises and stocks fall, then gold’s response may be relatively muted, although as a dollar-denominated commodity it too should fall. Obviously if the Fed comes across as more dovish than hawkish then one would expect the opposite reaction in these markets. | If so, we would expect the dollar to rip, especially against currencies where the central bank is still very dovish – for example, the Japanese yen and the Swiss franc. This outcome may also be modestly negative for the US stock markets. If the dollar rises and stocks fall, then gold’s response may be relatively muted, although as a dollar-denominated commodity it too should fall. Obviously if the Fed comes across as more dovish than hawkish then one would expect the opposite reaction in these markets. |
| 2.01pm BST | 2.01pm BST |
| 14:01 | 14:01 |
| Market calm as Fed 'bungee jump' looms | Market calm as Fed 'bungee jump' looms |
| After hitting record highs last night, Wall Street is expected to open calmly in 30 minutes time. | After hitting record highs last night, Wall Street is expected to open calmly in 30 minutes time. |
| That means the MSCI World stocks index remains at record levels, after fairly unspectacular sessions in Asia and Europe today. | That means the MSCI World stocks index remains at record levels, after fairly unspectacular sessions in Asia and Europe today. |
| Investors are braced for today’s Federal Reserve meeting at 2pm East Coast time, followed by Janet Yellen’s press conference. | Investors are braced for today’s Federal Reserve meeting at 2pm East Coast time, followed by Janet Yellen’s press conference. |
| US Opening Calls:#DOW 22370 -0.03%#SPX 2507 0.00%#NASDAQ 5991 +0.01%#IGOpeningCall | US Opening Calls:#DOW 22370 -0.03%#SPX 2507 0.00%#NASDAQ 5991 +0.01%#IGOpeningCall |
| As explained earlier, the Fed isn’t expected to raise interest rates today, but it will give new guidance about future rate hikes. | As explained earlier, the Fed isn’t expected to raise interest rates today, but it will give new guidance about future rate hikes. |
| Crucially, it is also expected to outline how, and when, it will start unwinding its huge stimulus programme. | Crucially, it is also expected to outline how, and when, it will start unwinding its huge stimulus programme. |
| Investors are hoping that Fed chair Janet Yellen and colleagues will tread cautiously to avoid causing market upheaval. | Investors are hoping that Fed chair Janet Yellen and colleagues will tread cautiously to avoid causing market upheaval. |
| But are they too relaxed? Unravelling a $4.5 trillion balance sheet is no easy task; any gyrations in bond prices or the US dollar’s value will have global ramifications, potentially triggering surges of capital around the world. | But are they too relaxed? Unravelling a $4.5 trillion balance sheet is no easy task; any gyrations in bond prices or the US dollar’s value will have global ramifications, potentially triggering surges of capital around the world. |
| Kit Juckes of Societe Generale, the French bank, says today’s meeting will all be about BSN - balance sheet normalisation. | Kit Juckes of Societe Generale, the French bank, says today’s meeting will all be about BSN - balance sheet normalisation. |
| Starting BSN if that’s the right term, is a return to ‘peace-time’ policy before Janet Yellen departs (if she does). | Starting BSN if that’s the right term, is a return to ‘peace-time’ policy before Janet Yellen departs (if she does). |
| It’s also an leap into relative unknown (never been done before) which is happening into a market which seems as relaxed as a teenager getting ready for a bungee jump. This market knows no fear. | It’s also an leap into relative unknown (never been done before) which is happening into a market which seems as relaxed as a teenager getting ready for a bungee jump. This market knows no fear. |
| Updated | Updated |
| at 2.04pm BST | at 2.04pm BST |