US MARKET WRAP – Treasuries meander ahead of Fed; equities set new record highs

US equity markets closed at record highs, again, as markets await the Fed’s monetary policy decision on Wednesday. Although markets expect the Fed to announce the start of balance sheet normalisation, they are not expected to hike rates and will more than likely downgrade their inflation forecasts, suggesting a shallower path for interest rate hikes. T-Mobile and Sprint shares both gained after the two companies were reported to be in merger in talks by CNBC, while financials were also strong on slightly higher rates. The S&P 500 closed up 0.1% at 2506.61, the NASDAQ-100 closed up 0.2% at 5991.08, and the DJIA closed up 0.2% at 22,371.80.

US treasuries trickled lower in relatively quiet trade with all focus on the FOMC decision. A small bid was seen after an ECB sources story which suggested that policymakers in disagreement on an end date for the bond buying program. Nevertheless, the bid was short lived, while volume was lower than that seen over the last five days. Dec’17 10y t-note futures settled at 125.31+, down 3 ticks.

In FX markets, the EUR initially fell on the ECB sources story but bounced amid mild USD weakness. GBP was in focus amid reports that the UK foreign secretary, Boris Johnson, could resign as early as this weekend, highlighting splits in May’s cabinet. The pound initially slipped on the reports although Johnson denied he was quitting and GBP regained some ground.

WTI ad Brent crude futures settled lower after hitting near 5-month highs early in the session with markets focussed on the API inventory report after market and Friday’s OPEC/non-OPEC meeting. The API report could still be affected by Hurricane Harvey as gasoline stockpiles recover and refineries come back on line. 

19 Sep 2017 - 21:00- Important- Source: RANsquawk

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