Tuesday’s Markets Pause For The Fed’s Cause

The markets appear to have hit the pause button as they await the outcome of today’s start of the FOMC’s 2-day meeting and this Sunday’s presidential election in France. Who knows what will happen with the French election. Trump’s presidential victory and Brexit vote remind all of us that anything is possible. However, with respect to interest rates, the market is assigning a 95% probability that the FOMC will not change its target range for interest rates on Wednesday. If so, then we’ll just have to kick the can further down to June and see what its outlook might be going forward.

Today’s US economic calendar was absent of any market moving events, but the day was not without importance. Asia-Pacific’s central banks maintained the status quo on their monetary and interest rate policies. Meanwhile, Europe’s Services and Manufacturing business climate continues to indicate more growth ahead, while similar conditions exists in Asia’s Japan and India as well.

Economy

Central Banks

  • Asia-Pacific / Japan: The Bank of Japan (BOJ) released its minutes from its last monetary policy meeting. As expected, it kept rates unchanged, along with the annual Y80 trillion pace of its purchase of JGBs.
  • Asia-Pacific / Australia: The Reserve Bank of Australia (RBA) left rates unchanged @ 1.5%.

Services & Manufacturing

  • Asia / Japan: Japan’s PMI Composite for April-2017 declined from its 19-month high @ 52.9 to 52.6, while its Services also pulled back from 52.9 to 52.2.
  • Asia-Pacific / India: India’s PMI Manufacturing Index for April-2017 was unchanged @ 52.7 and remains in expansion mode.
  • Europe / Eurozone: Europe’s PMI Manufacturing Index for April-2017 increased to 56.7 vs prior @ 56.2 and consensus @ 56.8.
  • Europe / Switzerland: Swiss PMI Manufacturing Index indicates robust business conditions still abound, as indicated by the 57.4 level vs prior @ 58.6 and consensus @ 58.2.
  • Europe / France: PMI Manufacturing Index for April-2017 remains in expansive mode @ 55.1 vs consensus @ 55.1 and prior @ 53.3.
  • Europe / Germany: PMI Manufacturing Index April-2017 @ 58.2 in line with consensus and just slightly under previous @ 58.3. Business conditions remain extremely strong.
  • Europe / UK: April-2017 saw one of the bigger gains for the CIPS/PMI Manufacturing Index, which registered 57.3 vs consensus @ 54.0 and prior @ 54.2.
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