Morning Macro 17th September
The market has completely priced in a 25 bp cut by the US Federal Reserve, with the Fed’s decision due at 19:00 BST this evening. All eyes will fall on the Fed’s “dot plot”, which shows each Fed official’s rate projection through the end of the year, and gauge Fed chair Jerome Powell’s tone as he answers questions about the economy. The last meeting saw two governors dissent for the first time since 1993, while Trump-nominated Stephan Miran has also now joined the board.
In the meantime, US retail sales came in stronger than expected at +0.6% in August m/m (exp: +0.2%), highlighting that despite cooling labour market data, consumer spending has seen more support. Still, the S&P 500 slipped 0.1% on Tuesday, while the tech-heavy Nasdaq composite eased by 0.1%, ending a six-day win streak. Nevertheless, energy was the best performing sector in the S&P 500 on Tuesday, rising 1.7% amid rising geopolitical tensions amid Ukrainian drone attacks on Russian refineries.
Gold set another all-time high (chart above), testing the $3,700 milestone on Tuesday, but has since eased to around $3,670 per troy ounce, likely on profit taking.
Hong Kong Chief Executive John Lee Ka-chiu unveiled a slew of policies aimed at reviving Hong Kong’s status as a global hub for gold trading, including plans to boost the city’s capacity for holding bullion to more than 2,000 tons over the next three years and establish a central clearing system for gold.
In the UK, inflation held at +3.8% y/y (unchanged from July), its highest level in over 1.5 years. Downward pressure from air fares was offset by motor fuel and prices at restaurants and hotels. Food inflation hit +4.8%, its highest level since early 2024.
US President Donald Trump has signed an executive order to delay the ban on TikTok until 16 Dec amid reports of talks on a buyer for TikTok’s US operations. The United States and China agreed on a framework for transferring TikTok’s US operations to the US at ministerial-level trade talks in Madrid. Trump and Chinese President Xi Jinping are expected to have a phone call on 19 Sep to reach a final settlement. As per the Wall Street Journal, US IT giant Oracle is considered a leading buyer.
Key data today:
- Euro Area CPI (10:00 BST)
- US MBA Mortgage Applications (12:00 BST)
- US Fed interest rate decision and economic projections (19:00 BST)
