The Federal Open Market Committee (FOMC) is scheduled to meet on September 20-21, and investors are on edge ahead of the decision on interest rates. The market is widely expecting a 75-basis-point hike, but there is some uncertainty about whether the Fed will be more aggressive in its fight against inflation.
Housing Market Uncertainty Continues
The housing market remains in flux, with mixed signals coming from different data points. Existing home sales have been on the decline, but new homes are still selling quickly. Building permits could provide a clue about whether builders are racing to meet demand, which could eventually lead to lower housing prices.
Energy Prices Rise, Posing Macroeconomic Risks
Energy prices have continued to rise, posing a risk to the global economy. Higher diesel and gas prices will drive up the cost of goods transportation, which could lead to further inflation. Investors will be watching energy prices closely this week.
Other Key Events to Watch
Existing Home Sales: Existing home sales are expected to show a modest increase in August, but the data will be closely watched for signs of a turnaround in the housing market.
Flash PMI: The Flash PMI readings for manufacturing and services are due on Friday. These readings are typically seen as leading indicators of economic health.
Earnings Season: Earnings season continues this week, with several major companies reporting their results, including Apple, Microsoft, and Alphabet.
Overall, investors are facing a number of uncertainties this week, with the FOMC meeting and energy prices being the two biggest factors to watch. The market is likely to be volatile in the lead-up to the FOMC decision, and investors should be prepared for any outcome.**
Analysis and Commentary
The FOMC meeting is the most important event of the week for financial markets. The Fed is expected to raise interest rates by 75 basis points, but there is some uncertainty about whether the central bank will be more aggressive in its fight against inflation. If the Fed signals that it is willing to do whatever it takes to bring inflation down, it could lead to a sell-off in stocks and bonds.
The housing market is another key area of concern for investors. Existing home sales have been on the decline, and there is a risk that the housing market could enter a recession. A recession in the housing market would have a significant impact on the overall economy, as it would lead to job losses and a decline in consumer spending.
Energy prices are also a major concern for investors. Higher energy prices are driving up the cost of goods transportation, which could lead to further inflation. If energy prices continue to rise, it could put a strain on the global economy and lead to a recession.
Overall, investors are facing a number of uncertainties this week. The FOMC meeting and energy prices are the two biggest factors to watch. The market is likely to be volatile in the lead-up to the FOMC decision, and investors should be prepared for any outcome.
