The FOMC will meet on Tuesday and Wednesday, and the outcome of its deliberations will overshadow the economic data in the September 19 week.
The FOMC meeting was expanded to two days from the original September 20 only date to allow more time to discuss policy options to address the flagging economic recovery, prolonged malaise in the labour market, and continued sluggish conditions in real estate.
Markets are anticipating some further action to provide additional accommodation. However, philosophical divisions among the Committee members increase the likelihood that there will continue to be one or more dissents in the vote. In fact, MNI's Steve Beckner wrote last week that he wouldn't be surprised to see three dissents again.
While FOMC members support providing accommodation, some do not think more is needed and/or question the efficacy of the tools that the Fed has available to provide it.
Most analysts believe that additional easing will take the form of extending the duration of the Fed's existing portfolio. This may or may not include some sales of shorter-dated securities to buy longer-dated ones. The intention will be to keep long-term rates low for a long policy horizon. Markets will eagerly await the release of the FOMC statement at 14:15 ET on Wednesday.
At this time, there is no press briefing scheduled after the meeting concludes. The Board of Governors will meet in closed session around midday on Monday to consider discount rate policy. It is expected to remain on hold for now at the current 75 basis points.
The IMF/World Bank fall meetings start on Friday and continue into the weekend. The recent G7 meeting of finance ministers and central bankers deferred any major policy announcement to the G20 session that will take place in conjunction with the other sessions.
It is a light data calendar for the week, and it will mainly focus on housing data.
Initial claims for the week ended September 17 on Thursday will be for the survey comparison week for August. Levels of new claims have been elevated in the last two weeks due to the after effects of Hurricane Irene. Those storm-related claims will probably ease in the latest data.
The Conference Board's Leading Economic Indicator for August will be released on Thursday. Recent jumps in the money supply data will contribute to an increase in the index, but consumer confidence will have a negative impact.
WTI CRUDE OIL:
The Last week of crude oil for October delivery, as the contract expires on Sept 20, ended on a positive note as ...Read more