Steady Markets Await This Week’s Central Bank Meetings

Equities, bonds and commodities are all relatively quiet to start the week. US index futures are up 0.1%-0.3%. In Europe, the FTSE is flat, and the DAX is up 0.5%. Crude Oil and Copper are both up 0.3%. Gold is down 0.2%. The Loonie is up 0.1%, the Euro is up 0.2%.

Signs of slowing in the world economy continue to emerge. China retail sales (3.4% vs Street 3.8%) and industrial production (5.2% vs Street 5.8%) both declined from last month and came in below expectations. The US Empire State Manufacturing Index (-8.7 vs Street 5.0 and previous 11.9). US retail sales and industrial production along with UK employment are all due tomorrow morning. Retail sales for Canada and the UK are due on Friday.  

On Wednesday both the Fed and the Bank of Canada are announcing interest rate decisions, and both are widely expected to cut their benchmark rates, in the US 0.25%, to 4.25%, and to 2.50% in Canada. Recent soft economic numbers on both sides of the border have increased the pressure on central bankers to do something.

Investors may closely scrutinize statements from central bank leaders and the FOMC member forecasts for insight into the state of both economies, North American inflation, and the potential for further rate cuts in the coming months. The Bank of England and the Bank of Japan meet on Thursday and Friday, neither of them is expected to change their benchmark rate.

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