S&P 500 futures ticked down Monday morning as investors look toward the Federal Reserve’s next policy decision. Futures tied to the broad index and Nasdaq 100 futures slipped around 0.1% and 0.2%, respectively. Futures tied to the Dow Jones Industrial Average lost 4 points, trading near flat. The S&P 500 and the Nasdaq both ended the previous trading week in the red, marking their second straight week of losses. The Dow managed to end the week 0.1% higher. West Texas International and Brent crude prices hit their highest levels since November on Monday. Up nearly 30% so far in the third quarter, WTI is on pace to see its biggest quarterly price gain since the first quarter of 2022. Investors are widely anticipating that the Fed will hold interest rates steady at the policy meeting this week. Traders will try get a better sense of the central bank’s stance on inflation from here. “How the Fed delivers the pause is crucial for November and December rate expectations, but whether it’s presented with a dovish or hawkish tilt is what matters most for financial markets,” said Quincy Krosby, chief global strategist for LPL Financial. Traders are assigning a 99% chance that the Fed stays put when it releases its rate decision on Wednesday and just a 31% probability of a hike in November, according to the CME Group’s FedWatch tool, which gauges pricing in the fed funds futures market. Recent inflation data came largely in-line with economists’ expectations. While the producer price index gained more than expected, the core PPI, which excludes food and energy, matched the estimate. The core consumer price index also increased slightly higher than expected in August, rising 0.3% month-over-month, against the estimate of 0.2%. But Krosby believes higher prices could be ahead as the labor market remains strong. The United Auto Workers strike could place further upward pressure on prices, according to the strategist. “Given the UAW strike with the potential for a substantial pay package, coupled with labor’s recent successful negotiations, underpinning a broad swath of higher wages, the FOMC is faced with a likelihood of resulting higher prices,” Krosby said. Policymakers will be looking toward more economic data releases Monday. The National Association of Home Builders will be releasing September’s Housing Market Index data. The New York Fed will also be announcing September’s Business Leaders Survey results. U.S. Treasury yields climbed on Monday as the focus shifted to the Federal Reserve meeting scheduled for this week, which could provide clues about what could happen to interest rates in the coming months. At 6:15 a.m. ET, the yield on the 10-year Treasury was up by 2.5 basis points to 4.347%. The 2-year Treasury yield was last trading more than 2 basis points higher at 5.056%. Asia-Pacific markets slipped Monday as investors look ahead to a week of central bank decisions. The U.S. Federal Reserve’s decision is expected early Thursday in Asia, while Australia’s central bank will release its minutes for its Sept. 5 policy meeting on Tuesday. On Friday, the Bank of Japan will conclude its monetary policy meeting and traders will be looking for clarity on when the BOJ will start to shift its ultra-easy monetary policy. Elsewhere, the People’s Bank of China is also expected to release its loan prime rate decisions on Friday. In Australia, the S&P/ASX 200 started the week down 0.67% and closing at 7,230.4, while South Korea’s Kospi also fell 1.02% and ended at 2,574.72 and the Kosdaq slumped 0.86% to 891.29. Hong Kong’s Hang Seng index slid 1.4% in its final hour, while mainland Chinese markets bucked the wider sell-off and rose, with the CSI 300 gaining 0.51% and closing at 3,727.71. It was the CSI’s first gain in four days. Japan’s markets are closed for a public holiday. Global oil benchmark Brent crude hovered above $94 a barrel on Monday, with investors focused on the prospect of a widening supply deficit in the fourth quarter after Saudi Arabia and Russia extended supply cuts. Brent crude futures rose 52 cents to $94.45 a barrel while U.S. West Texas Intermediate crude were up 66 cents at $91.43. Gold prices edged higher on Monday as investors priced in a likelihood that the Federal Reserve will not raise rates at its policy meeting this week, with a focus on the U.S. central bank’s rate outlook. Spot gold rose 0.13% to $1,926 per ounce by 6:45 ET. U.S. gold futures were up 0.11% to $1,948.30.
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