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Good morning friends!
Futures are flat but mostly lower as traders look ahead to this week’s Fed meeting.
Let’s get right to it!
Traders are looking ahead to the Fed’s rate decision on Wednesday with focus on language about future policy decisions.
CME Group’s FedWatch Tool shows 99% of traders expecting no rate hike this week.
But the market is more split on whether the central bank might hike again in November and December.
The market will be analyzing the FOMC statement and Chairman Jerome Powell’s press conference for a more dovish or hawkish stance on future policy.
Meantime, the bulk of important economic data this week is focused on the housing market.
The NAHB releases its homebuilder sentiment index at 10:00 a.m. ET today.
Then the Census Bureau reports housing starts and building permits at 8:30 a.m. ET Tuesday.
And finally, the National Association of Realtors reports existing home sales at 10:00 a.m. ET Thursday.
Treasury yields are starting this week higher ahead of Wednesday’s Fed decision.
The 2-year yield is up nearly 3 basis points over 5.06% while the 10-year yield is up 2 basis points to 4.35%.
Last week’s inflation data was relatively in-line with economists’ expectations and the consumer sentiment index showed a significant decline in inflation expectations.
Oil prices are continuing to rise, putting pressure on inflation.
West Texas Intermediate crude futures are up 1.2% at nearly $92 bbl while Brent crude futures are up 0.9% at just under $95 bbl.
The recent rally comes amid supply concerns after Saudi Arabia and Russia extended their production cuts through the end of the year.
Both WTI and Brent have climbed for three straight weeks to the highest prices since November 2022.
Prices are on track for the largest quarterly increase since Q1 2022.
Arm Holdings (ARM) shares are down 4.2% ahead of the open after Bernstein initiated coverage on the newly-listed stock this morning.
Bernstein analyst Sara Russo rated the stock “underperform” and said it’s too early to know if it will be an AI winner.
In a note to clients Russo wrote, “While expectations that Arm will be a beneficiary from AI growth may be adding a premium to the share price, we believe it is too soon to declare them an AI winner. In addition, we remain more conservative on their ability to deliver increased royalty rates at the pace management is guiding.”
She put her price target at $46, down more than $14 from where the stock closed on Friday.