Stocks mixed ahead of Fed meet; euro gains, oil rises

Bloomberg

Equity markets were mixed on Tuesday, the dollar fell and Treasuries edged higher before as the Federal Reserve began a two-day meeting and investors awaited Donald Trump’s speech to the United Nations.
The S&P 500 Index churned near an all-time high, stuck in one of the tightest ranges in decades. The CBOE Volatility Index slumped below 10. Europe’s equity benchmark followed many Asian peers lower, while Japanese shares surged after a holiday.
The pound swung before jumping after a report Foreign Secretary Boris Johnson may resign should Prime Minister Theresa May oppose his Brexit demands. The euro headed for a fourth daily gain. Most government bonds rose, though many moves were muted. Benchmark WTI crude rose above $50 per barrel.
Investors could be forgiven for avoiding any major new positions in the wake of recent equity gains and in the buildup to the Fed decision. They’ll be looking for clues from policy makers on the chances of further interest-rate increases this year and for details on when they’ll begin unwinding part of the Fed’s $4.5 trillion balance sheet.
“We are not overly concerned about” the Fed’s quantitative-tightening plans, Merrill Lynch and US. Trust head of fixed-income strategy Matthew Diczok told Bloomberg TV. “If you model it out, over about the next three years they’ll take out about $1.3 trillion or so. That’s only a third of what they put into the market. So it’s going to be very slow, very gradual, very deliberate and it shouldn’t lead to any near-term fireworks into the market at all.”
Beyond the Fed, Europe’s increasingly bullish growth story, ongoing Brexit drama and efforts by China to counter excessive currency strength provide plenty of alternative narratives. Meanwhile the US president will address the United Nations at 10.30 am in New York, as world leaders continue to seek a diplomatic solution to North Korea’s nuclear provocations.
Brexit strategy is in focus as Theresa May prepares to outline her revised approach on Friday. The Fed’s rate decision is on Wednesday. The Bank of Japan is predicted to stand pat when it reviews policy on Thursday. The BOJ probably won’t reveal when it will unwind stimulus, but could signal determination to keep the yield curve under control. Indonesia, the Philippines and South Africa are among countries also reviewing monetary policy this week. Home construction and sales of previously owned properties are the highlights of the week’s US economic calendar.
Campaigning continues in Germany, days before the September 24 election. New Zealand goes to the polls on September 23.

US housing starts steady
Bloomberg

Steady US new-home construction in August together with a jump in permits indicate the housing market was moving ahead before a likely temporary hit from Hurricanes Harvey and Irma, government figures showed on Tuesday.
Residential starts fell 0.8% m/m to a 1.18m annualised rate (est. 1.174m) after upwardly revised 1.19m pace the prior month. Single-family home starts rose 1.6% to 851k; multifamily starts, such as apartment buildings and condominiums, fell 6.5% to 329k.