(7:15am, PST)
The U.S. markets have opened in the red this morning ahead
of the Federal Open Market Committee’s announcement on interest rates later
today. It has been a pretty ho-hum week in the markets as investors haven’t
wanted to commit in any direction until the announcement is made. The consensus
among experts is that the committee will not announce a rate hike today but the
uncertainty lies in what they will say about how many hikes they expect for the
balance of the year. An improvement in the global markets, a jump in crude
prices, softening of the dollar and some strong signs on the economic front
here at home could sway the Fed toward more increases and investors may not
like that news. A slew of economic data out already this morning points toward
improvements. Core CPI, which excludes food and energy, rose 0.3% for the
second straight month and is now up 2.3% year-over-year on an adjusted basis.
This is a data point that the Fed has kept an eye on as they look at a target
of 2% inflation as a benchmark to raise rates. A strong report on Housing
starts will lend support to this thought too. Starts were at their highest
level since September and up 5.2% from an upwardly revised January rate. We
have talked about a good news is bad news scenario in regards to economic news
and decisions by the Fed. Today is a perfect example of that.
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