Stocks Rebound Ahead of Fed Decision as Retail Sales Bounce

Stock markets are bouncing back today as investors await the Fed’s interest rate decision. FOMC member forecasts for interest rates, inflation, and GDP may also attract attention. Treasury yields and the US Dollar are steady ahead of the news, while energy prices have eased slightly. A stronger-than-expected rebound in US retail sales appears consistent with the nonfarm payrolls recovery earlier this month, suggesting resilience in the US economy.

NASDAQ futures are up 0.6%, while Dow futures are up 0.3%. In Asia, the Nikkei was up 0.7%, and the Hang Seng was up 0.2%. In Europe, the DAX is up 0.4%, and the FTSE is up 0.7%.

Crude Oil is down 2.1% but remains above $103.00/bbl, while Brent Crude is down 1.5% and remains above $107.00/bbl. Gasoline is down 1.5%, still trading above $3.40/gallon. Metals are advancing, with Gold up 1.2%, climbing towards $4,385/oz, and Copper up 1.0%, moving back above $6.50/lb. Silver is up 2.1%.

US Treasury yields are steady, with the 10-year note near 5.00% and the 30-year note near 5.35%. Currency trading is quiet, with the USD Index up 0.1%, while the Euro and Loonie are each down 0.1%.

US retail sales bounced back more strongly than expected (1.2% vs Street 0.8% and previous -0.6%).

At 2:00 pm EDT, a 0.25% increase in the Fed Funds rate to 4.00% is widely expected. On Thursday morning, the Bank of England is widely expected to hold its benchmark interest rate at 3.75%, with the number and direction of dissenting MPC votes potentially drawing scrutiny. On Friday morning, the Bank of Japan is widely expected to increase its benchmark interest rate by 0.25% to 1.25%.

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