Global market news: Markets ‘dovish’ as all eyes turn toward Fed meeting

Asian share markets were flat on Wednesday as traders await the US Federal Reserve meeting, that will decide whether to raise interest rates.

Fed reserve meeting ahead Source: Bloomberg

As a result, all eyes were on the Fed reserve meeting, and oil prices fell as a supply glut caused Brent and US crude prices to drag to significant lows.

This comes after US President Donald Trump voiced his concerns of a rate hike decision. He warned the central bank on Tuesday to not “make yet another mistake”

IG Market Analyst, Kyle Rodda says traders are treading carefully, anticipating the Fed decision.
“Traders obviously can’t take much of it any more. Risk is off the table and bets are being placed that we are in for a “dovish hike”. That is: a hike tomorrow, but a very careful downgrade in the projections for future hikes.” Mr Rodda said.

Mr Rodda says markets are going deep on the notion that a dovish Fed is upon us.
“The possibility is that the markets have set the bar too low.” Mr Rodda said.

Oil price

Oil - Brent Crude fell 6% overnight, while Oil - US Crude was down another 13 cents on Wednesday at $46.11 a barrel.

Bonds

10-year Treasury yields fell to their lowest since August at 2.799 % on Wednesday

Yields on two-year US notes touched a three-month trough of 2.629 %, with Yields in Japan and Australia also reaching multi-month lows.

“Junk bonds suffered the most, with the spread on high yield credit widening to multi-year highs. The dynamic was fuelled by another tumble in oil prices on fears of a slow-down in economic activity will cause a supply glut.” Said Mr Rodda.

The USD pulled its index back to 97.000, from a recent 97.711 top.

It fell to 112.46 JPY yen, from a 113.70 high, while the euro bumped up to $1.1374 from a $1.1266 low.


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