Morning Minutes

Last Call For Data Before the Big Fed Decision




Today at 2:00 pm the Fed releases its latest monetary policy decision and statement. Investors are looking for some clarity on whether the US central bank is planning to start tapering back asset purchases this year (like central banks in Canada, Australia, and New Zealand have already), or if it intends to let stimulus continue as is into next year (as the European and Japanese central banks have already decided). Previous hints from the Fed have suggested it could run down asset purchases between the end of this year and the middle of 2022, and then start raising interest rates in the second half of 2022. Any acceleration of this schedule could be seen as hawkish, any slowing of this schedule could be seen as dovish.

The Fed decision arrives at a point when evidence of stagflation (slow economic growth and high inflation) have been increasingly showing up in economic reports. This morning brings the last round of data ahead of the decision. US ADP payrolls showed a resilient economy, coming in stronger than expected (571K vs street 400K and previous 568K). At 10:00 am EDT US ISM Services PMI reports are due with the street expecting readings of 62.0 for the headline number, 63.2 for the forward-looking New Orders component, and 76.9 for the Prices Paid inflation component. US factory orders are also due at 10:00 with the street expecting a 0.1% monthly decline.  

The market reaction to corporate news has been very mixed today. Bed Bath and Beyond is up 53.1% premarket action after the home products retailer announced a new partnership with grocery chain Kroeger. Video game producer Activision Blizzard is down 13.0% premarket after posting disappointing guidance for the upcoming holiday season. Lyft is up nearly 14.0% premarket after posting a surprise profit (+$0.05 vs street -$-0.03). Zillow is down 15.7% premarket after announcing plans to shut down its house flipping business and reporting surprise losses. Later today, results are due from several senior insurance companies including Manulife Financial, Sun Life, Great West Life, and MetLife.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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