Wednesday, December 13, 2017

Markets climb ahead of Fed decision on a rate hike

Dow advanced 112, advancers over decliners better than 3-2 & NAZ went up 29.  The MLP index inched higher in the 271s after yesterday's gain & the REIT index was fractionally higher in the 358s.  Junk bond funds dipped lower & Treasuries were up a tad.  Oil slid back pennies in the low 57s & gold gained 8 to 1250.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil57.20

GC=FGold   1,244.30

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Stocks were higher, the $ dropped & Treasuries gained after a measure of US inflation fell short of estimates hours before the Federal Reserve is due to announce the outcome of its final policy meeting of the year.  The Stoxx Europe 600 Index slipped, with losses for utilities offsetting gains for retailers.  Earlier, benchmarks in Australia, South Korea & Hong Kong rose, while stocks in Tokyo fell after US equities posted fresh all-time highs overnight.  The $ halted 4 days of gains, its longest winning streak since Jan 2016, after data showed US consumer inflation picked up in Nov, though the core gauge, which excludes food & energy costs, unexpectedly slowed.   Analysts anticipate the Federal Reserve will raise interest rates after its meeting later today.  The ECB is expected to reveal details of plans to taper asset purchases tomorrow.  Comments on the outlook for 2018 will be the focus for investors as they weigh the impact of coming policy normalization on global asset prices.  Meanwhile, crude gained on signs that US stockpiles dropped for a 4th week & gold was little changed.

U.S. Stocks Gain, Dollar Weakens on Price Data: Markets Wrap

 An unexpected cooling in a key measure of US inflation means Federal Reserve policy makers may be hard-pressed to raise interest rates more aggressively in 2018.  The core consumer price index, which excludes food & fuel, increased 0.1% in Nov from the prior month & 1.7% from a year earlier, less than the projection, a Labor Dept report showed.  Including all items, CPI rose 0.4% from Oct, accelerating thanks to a jump in energy prices.  Treasury yields fell after the report, which indicated that underlying inflation is still having trouble gaining momentum, though central bankers have said transitory factors are probably holding down prices.  The CPI rose 2.2% from a year earlier, matching the estimate following Oct's 2% gain.  The slowdown in core inflation can be partly attributed to the shelter index’s rise of 0.2% from the previous month, the smallest gain since Jul.  Shelter accounts for about 1/3 of the headline index.  In addition, the medical-care index was unchanged after a 0.3% gain in Oct, while apparel prices slumped 1.3%, the biggest drop since 1998.

Soft U.S. Core Inflation May Keep Fed From Speeding Up Hikes

EU chief Brexit negotiator Michel Barnier said there will be "no turning back" for Britain on commitments made during an initial divorce deal between the 2, after his UK counterpart insisted it was merely a "statement of intent."  Barnier said to the European Parliament that the negotiations so far have been "extremely complex and extraordinary" but insisted that he had made no concessions to the British side.  UK negotiator David Davis suggested over the weekend that the deal was less than cast in stone.  But Barnier said "progress has been noted and recorded and is going to have to be translated into a legally binding withdrawal agreement" on the EU bill Britain faces, the maintenance of a transparent border between EU member Ireland & the UK's Northern Ireland, & citizens' rights in each other's region.  The European Parliament's chief Brexit official, Guy Verhofstadt, said Davis was already backtracking after his statement Sun, which riled officials in Brussels.  Verhofstadt said he & Davis had spoken yesterday & that Davis "assured me it is absolutely not his intention, not the intention of the U.K. government, to backtrack on their commitments."  "The best way to secure this is that in the coming weeks we transpose all these commitments into the legal text of a withdrawal agreement," he added.  Most of the legislature had warm words for the performance of Barnier in running a tight ship during the talks & keeping the 27 remaining EU nations united in their stance.

EU negotiator says 'no turning back' on commitments

Today traders' attention is on the highly probable rate hike & what Janet has to say about the future, although she will be leaving.  With the rate hike so well advertised, drama is very low.  More important is the tax reform bill being being massaged by the House & Senate.  They will come up with a compromise between the 2 bills.  Drama on what they come up with is very high because the fate of the final bill remains cloudy.  Back to Janet.  Today her comments will move the stock market in the PM. 

Dow Jones Industrials

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