US FOMC Set to Raise Rates Overnight

The Dow Jones opened higher last night but entered a downtrend about half way through the day which caused it to close 0.26% lower. It was a better story for the tech heavy Nasdaq 100 which closed up 0.19%. Amazon (AMZN) shares were one of the stronger performers, climbing 2.1% in a steady rally throughout the day.

US 10-year bond yields are sitting right at a critical level, 3.10%, which is just below a new seven year high. The yield curve, measured as the difference between the two year and ten year yields, has widened slightly from its low point, currently at 28 basis points. The narrow spread means that bond markets are sceptical about long term growth/inflation prospects even though the central bank is continuing to raise short term interest rates.

Early tomorrow morning (AEST) both the US Federal Reserve and Reserve Bank of NZ will meet to decide interest rates. The Federal Reserve is expected to hike rates by 25 basis points while the RBNZ is expected to hold rates steady at 1.75%.

The ASX 200 has been trading in a narrow range for over two weeks now. This has the appearance of a consolidation pattern following on from the modest declines from late August/early September. ASX 200 futures are up 6 points this morning. 

Data Releases:

-    FOMC Interest Rate Decision 4:00am AEST

This article was written by William O'Loughlin - Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
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