Yahoo Finance Fed’s Kaplan Says He’ll ‘Keep an Open Mind’ About Next Rate Hike
It was another relatively slow day as far as the economic reports were concerned on Tuesday. However, this may just be the calm before the storm ahead of Wednesday’s U.S. Federal Reserve monetary policy minutes, Thursday’s producer inflation data and Friday’s consumer inflation and retail sales reports.
The National Federation of Independent Business’s (NFIB) index of small business optimism dropped 3 points in September to 103, down from 105.3 in August. Traders had priced in 105. Last year about this time in was sitting in the 90’s before surging to 105.8 in December after the election.
The IBD/TIPP Economic Optimism Index, dropped across every category in October, indicating lower consumer confidence. The index overall fell by 5.8 percent to 50.3, its lowest point in the last 12 months. Despite this month’s weakness, the index remains in positive territory, continuing its longest stretch in more than a decade.
In other news, Dallas Federal Reserve Bank President Robert Kaplan said late Tuesday that he will be assessing the progress of the U.S. economy toward full employment and looking for more signs of upward inflation as he weighs potential interest-rate hikes.
“I intend to keep an open mind about removing accommodation in upcoming (Fed) meetings,” Kaplan said in remarks prepared for delivery at the Stanford Institute for Economic Policy Research.
U.S. Equity Markets
The major U.S. equity indexes rose to record highs on Tuesday, led by a sharp rise in Wal-Mart, which announced a large buyback and Honeywell which said it was splitting into two. Investors also reacted to Pfizer which announced it was contemplating a spin-off.
Wal-Mart announced a $20 billion buyback before the opening bell and reiterated its earnings outlook for the current fiscal year. Honeywell announced it plans to spin off its Home Products and Transportation Systems businesses into two separate public companies by the end of the year. Pfizer said it was thinking about selling or spinning off its consumer health-care business, which generates $3.4 billion in annual sales.
Gold
Gold rallied to its highest level in nearly two weeks on Tuesday, helped by a weaker U.S. Dollar and geopolitical tensions in Spain and North Korea. Gains, however, were limited by expectations of a third rate hike this year by the Fed.
In Spain, Catalonia’s secessionist leader Carles Puigdemont is due to address the region’s parliament in Barcelona, where he could ask the assembly to vote on a unilateral declaration of independence.
Traders remained concerned over a possible response by North Korea to confrontational Twitter posts from President Trump, hinting that military action was on his mind. Meanwhile, Russia and China both called for restraint from the President.
Crude Oil
U.S. West Texas Intermediate and international-benchmark Brent crude oil rose for a second-day on Tuesday on signs that markets are gradually tightening after years of oversupply. However, gains were capped because of uncertainty over supply/demand in 2018.
Traders continue to look for a catalyst to fuel the next major move. Most of this week’s price action has been in response to commentary from OPEC officials. This week’s American Petroleum Institute’s and U.S. Energy Information Administration’s weekly inventory reports have been delayed a day due to Monday’s federal holiday.
This article was originally posted on FX Empire
