For the typically lackluster mid-December time period, most major markets are still relatively liquid and volatile, and traders continued engagement can be chalked up almost entirely to tomorrow’s landmark FOMC decision.
The Fed minutes are said by some to have been dovish. If one considers that the Fed minutes did little to nudge front end implied rates closer toward expecting a policy move in December, then by that definition, the minutes were friendly.
A 15-year high for tech stocks on the Nasdaq helped world shares to a 2-1/2 month peak on Tuesday, though more engine trouble for Volkswagen and a $5.1 billion cash call by Standard Chartered left Europe feeling flat.
On Wednesday, the Fed Open Market Committee announced that it would not raise interest rates in October 2015. That means that Zero-Interest Rate Policy (ZIRP) has remained in place for 2,508 days and counting.
After yesterday’s hawkish FOMC statement we should prepare for even more scrutiny of every U.S. economic release, starting with today’s GDP reading, as investors once again try to anticipate whether or not we’ll get a rate hike in December.
The Fed Open Market Committee will meet this week to discuss monetary policy and the possibility of the first U.S. rate hike in years. With dovish sentiment dominating the global dialogue of central banks, keep an eye on additional policy meetings from Sweden's Riksbank, the Reserve Bank of New Zealand and the Bank of Japan.