America’s central bank will announce at 7pm BST whether it has raised borrowing costs for the first time since the financial crisis began * Introduction: Will the Fed hike today? * Moodys: Russia, Brazil, Turkey and SA all at risk * Economists unsure what will happen * Markets edgy 12.11pm BST ONCE THE FEDERAL RESERVE MEETING IS OVER TONIGHT, THE FINANCIAL MARKETS CAN RETURN TO FRETTING ABOUT GREECE. “As long as you abstain others make plans against you.” After Fed uncertainty put to bed this evening, thank goodness for weekend equally-difficult-to-call Greek election result to keep us amused 11.45am BST A glimmer of good news has been spied in Greece, ahead of Sunday’s election. Fewer than one in four adults are officially unemployed, for the first time in over three years: Unemployment dips below 25% in second quarter #Greece http://t.co/Oqmw7OxYkG pic.twitter.com/uor5Aa5qUn 11.26am BST Money has already been flowing out of emerging markets and into the stock markets of advanced economies, in anticipation of higher US interest rates: European stocks increasingly seen as safe haven as #Fed decision looms http://t.co/5QofsWKwhs pic.twitter.com/t4hrTWuFMs 11.15am BST JUST 32%. That’s the market-implied probability that America gets its first interest rate rise since 2006 today. 10.50am BST UBS: rarely has there been such a divide in opinion among econos & investors on what the Fed should do & what the Fed is most likely to do. 10.48am BST City investors are adopting a classic “HOLD-OFF-AND-SEE” stance ahead of tonight’s Fed decision, says MIKE VAN DULKEN, HEAD of research at ACCENDO MARKETS. Mike adds: This announcement is all the more important given its potential to include the first rate hike in a decade, signalling the beginning of the end of extraordinarily cheap money and exit from ‘crisis’ mode. 10.42am BST THE US DOLLAR HAS WEAKENED A LITTLE THIS MORNING, DOWN 0.3% AGAINST THE EURO TO $1.1327. That suggests traders are pricing in ‘no change’ from the Fed tonight. FX markets relatively subdued ahead of #FOMC. #Dollar selling off slightly since the European open. TM pic.twitter.com/6MlPZRPosB 10.21am BST BRAZIL, RUSSIA, TURKEY AND SOUTH AFRICA HAVE MOST TO FEAR FROM A US INTEREST RATE HIKE, SAYS RATING AGENCY MOODY’S IN A NEW REPORT. Countries most at risk from US rate hike are Brazil, Russia, Turkey, South Africa, which have "severe domestic challenges" - Moody's 10.13am BST WITH NINE HOURS UNTIL THE BIGGEST FED DECISION IN YEARS, EUROPE’S MAIN STOCK MARKETS ARE ALL SUBDUED. The FTSE 100, German Dax and French CAC are all in the red, with investors reluctant to take big positions before tonight’s drama. The jury remains out as to whether Janet Yellen and her team will be able to push through a rate hike, with yesterday’s downturn in US inflation data being the latest roadblock, but it seems inevitable that if policymakers across the Atlantic do hike rates then equity markets globally will be in for a rough end to the week. 9.58am BST WE ALREADY HAVE ONE CENTRAL BANK DECISION, AND IT’S A NO CHANGE. 9.33am BST After June's no show, if Yellen's #FOMC don't hike tonight, she will be the financial equivalent of #Wenger in the transfer market 9.25am BST BLOOMBERG HAS SURVEYED 113 ECONOMISTS, AND A NARROW MAJORITY PREDICTED THE FED WILL NOT RAISE RATES TODAY. Bloomberg’s Jon Ferro says the FOMC members must weigh up “the good, the bad and the complete unknown” when they gather today. 9.01am BST Tonights #FOMC decision, latest polls: #Bloomberg: 30% chance of a rate hike #FT: 47% chance of a rate hike #Fed #USD 8.49am BST AROUND HALF OF THE TOP ECONOMISTS IN THE CITY AND ON WALL STREET WILL FEEL PRETTY SMUG WHEN THE FED DECISION IS ANNOUNCED. “Fed Chair Janet Yellen has been conspicuously silent, with no significant comments since July’s congressional testimony.” “We think the recent global market volatility – driven by ongoing concerns about global growth – has raised the bar for a first rate hike near-term.” 8.36am BST THE FED COULD POTENTIALLY DECIDE TO LEAVE INTEREST RATES UNCHANGED, BUT MAKE IT VERY CLEAR THAT A HIKE IS COMING SOON. Alternatively, it could increase borrowing costs but then attempt to reassure investors that it will remain cautious. A clear message that a hike is ‘on its way’ is expected, so inaction today will likely only have a significant impact if the message is more dovish than that. A 25% rate hike would be a surprise to the market (though not to SG Economists) but the biggest surprise of all would be failure to lace any decision with dovish undertones. The first reaction to the policy decision may not tell us much but over the coming months, a sluggish global economy, slowing growth in China and continued monetary policy divergence will dictate currency trends. There will be further downward pressure on commodities and commodity exporters’ currencies and there will be further upward pressure on the dollar. 8.30am BST FRENCH BANK BNP PARIBAS PREDICTS THAT THE FED WILL NOT RAISE INTEREST RATES TODAY. Analyst Andrew MacFarlane explains (with some bonus US history thrown in): So we finally arrive at this most pivotal of days which is likely to have major implications around the world; yes, it is Constitution Day in the US, the annual celebration of that fateful day in 1787 when a committee of delegates signed the final draft in Philadelphia. It seems almost fitting that 228 years later, a committee of delegates will today meet at the Federal Reserve to discuss the future of the United States; let’s just hope they don’t have to make 27 amendments as well… BNP is calling for no change to rates, few changes in the policy statement, and a dovish set of economic and interest rate projections. 8.29am BST THERE IS A 30% CHANCE THAT THE FED WILL RAISE INTEREST RATE TONIGHT, ACCORDING TO THE FED FUNDS FUTURES MARKET. That market, which allows investors to wager on rate moves, also shows that a majority expect rates to rise before Christmas. Morning Note: 1. FOMC decision day. Economists divided. 2. Bridgewater's Ray Dalio says don't go. 3. Markets say NO pic.twitter.com/4giRglmLxR 8.15am BST THERE’S AN EDGY MOOD IN EUROPE’S STOCK MARKETS THIS MORNING. Investors as nervous, as they simply don’t know for sure which way JANET YELLEN and her colleagues on the Federal Open Market Committee (FOMC) will jump tonight. 8.03am BST ASIAN STOCK MARKETS HAVE RISEN TODAY, ON SPECULATION THAT THE FEDERAL RESERVE WILL RESIST THE PRESSURE TO HIKE INTEREST RATES TODAY. Angus Nicholson, of IG’s Melbourne office, explains: Asian markets are doing well today in cautious positioning ahead of the Fed rates decision, with currency moves in particular reflecting the general feeling that rates will be left unchanged. The Korean Won, one of the most sold currencies in Asia, is having an impressive day, rising 0.6% against the US dollar. Nikkei ends up 1.4% at 18432.27 and Yen weakens vs Dollar ahead of the most important #Fed decision in decades. pic.twitter.com/XmqncuXPDj 7.45am BST GOOD MORNING. Fed day. Exciting. How emerging market economies will be waiting on the #Fed rate decision later on in the day pic.twitter.com/GI3HA4Q2si Former Dallas Fed President Richard Fisher, on CNBC: "I think they’ll actually, for the first time in a long time, decide this at the table" Continue reading...
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