From Marc to Market:
Overview: A consolidative tone has emerged ahead of the outcome of the FOMC meeting later today. The focus is not so much on the 75 bp rate hike, but on its forward guidance. Many expect the Fed to signal it will return to a 50 bp move next month, but we are not convinced that it will go beyond indicating that 50 bp or 75 bp will be debated in December, depending on the data. The market has a 5% terminal rate discounted. The Fed does not need to validate it now. Next month it updates the dot plot and that is a more reasonable forum. Equities in Asia Pacific and Europe rose. US futures are slightly firmer. Benchmark 10-year yields are mixed. The US is flat around 4.04%, while European yields are mostly 1-3 bp firmer. The dollar is trading with a lower bias, with the fear of intervention tomorrow when Tokyo markets are closed and is helping the yen lead the charge, followed by the Antipodean currencies. Emerging market currencies are broadly mixed.
Gold is extending its recovery after posting an outside up day yesterday. It is near $1655 after testing $1631 yesterday. December WTI is flat around $88.30. It rallied 2.1% Tuesday. US natgas remains volatile and is up nearly 4.5% today after dropping 10% yesterday. Europe’s benchmark collapsed 23.6% Monday and jumped 39% yesterday. It is up 8% today. Iron ore snapped a six-day slide yesterday with a 1.2% gain. It is built on that today with a 3.1% gain, the most in nearly two months. December copper rose 2.9% yesterday and is up about 0.5% today. The resumption of grain shipments from Ukraine, appears to be capping wheat prices after the December contract rose more than 8.5% over the past two sessions. It is off about 0.85% now....
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