Economy

Markets subdued ahead of Fed policy decision

Markets subdued ahead of Fed policy decision”

The Fed also announced it will begin to roll off its $4.5 trillion balance sheet in October and did not raise interest rates.

On the balance sheet - this isn't meant to be an "active tool" for monetary policy, so the reduction is on a preset course that the Fed isn't intending to change.

Higher interest rates are seen as boon for banks, boosting net interest margin - the difference between the interest income generated by banks and the amount of interest paid out to their lenders. Benchmark 10-year notes fell 9/32 in price to yield 2.27 percent, after yields got as far as 2.29 percent, the highest since August 8. Hong Kong's Hang Seng index added 0.4 per cent to 28,127.80.

The consumer staples sector .SPLRCS fell 0.9 percent while the utilities sector .SPLRCU ended 0.8 percent lower.

The 10-year yield /quotes/zigman/15866666/realtime TMUBMUSD10Y is up 2.272%, a rise of 2.4 basis poitns on the day and up from 2.236% ahead of the announcement. Most expect members of the Fed's interest-rate setting committee to react to the string of soft inflation readings by lowering their estimates of the number of rate increases in 2019, said Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research.

Bond prices move in the opposite direction of yields.

The release of some strong retail sales figures has done little to help the index, as so numerous companies that are listed in the FTSE 100 take most of their earnings from overseas, and in foreign currency.

"They don't want inflation expectations to fall below 2 percent or rise too far above 2 percent because then it becomes very hard to manage", he said in an interview with "Closing Bell". "This puts a little pressure on gold", said Jeff Klearman, a portfolio manager at GraniteShares, a provider and manager of exchange-traded funds. Several packaged food companies also declined.

That should shed almost $300 billion in bonds over the first 12 months, and almost $500 billion over the second, according to analysts' projections.

The U.S. 2-year Treasury yield hit a high of 1.430 percent, its highest level since July 6.

Energy stocks were rising along with the price of crude oil early Wednesday.

The top Dow gainers for the session: McDonald's Corporation (NYSE:) up 1.6%, Pfizer Inc (NYSE:) up 1.5% and Boeing Co (NYSE:) up 1.2%.

Cereal maker General Mills was also down 8 percent after reporting a disappointing quarter. Its inflation target is 2 percent.

The pan-European FTSEurofirst 300 index lost 0.18 percent.



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