U.S. Treasury yields are lower in most tenors in a shift to ‘risk-off’ sentiment. Global equities are also lower as traders pare positions ahead of today’s FOMC rate announcement. The Fed is widely expected to raise its policy rate by 25 basis-points, but there is uncertainty about the tone of the policy statement and whether recent inflation data has improved enough to shift the Fed to a more neutral rate stance.
While core year-over-year CPI at 4.8% is an improvement over the prior reading of 5.3%, it is still well above the FOMC’s sustained 2% target so it’s hard to imagine Fed Chairman Powell changing course now.
The USD is evenly mixed against the G10 pairs and slightly lower against the full list of major currencies. The U.S. Dollar Index is -0.13%, in a narrow holding pattern prior to the Fed announcement.
Oil prices are lower by 1.18%, the first decline following 4 consecutive daily gains totaling 5.68%.
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