Former Fed trader sees 25 bp rate cut
Main U.S. indexes edge down ahead of FOMC decision
S&P 500 sectors mixed, changes modest
Euro STOXX 600 index off ~0.5%
Dollar, gold ~flat; crude dips; bitcoin off ~1%
U.S. 10-Year Treasury yield rises to ~3.69%
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FORMER FED TRADER SEES 25 BP RATE CUT
The Federal Reserve is likely to cut its policy rate by 25 basis points on Wednesday, former Fed trader on the central bank's open market trading desk Joseph Wang said.
"My sense is Fed officials just don't see the need for big cuts and view the recent slowing as normalization," said Wang, currently CIO of investment management firm Monetary Macro, popularly known in markets as 'the Fed guy'.
"I place more emphasis on the more influential Fed speakers, and my read is that they are open to 50 bps, but not pushing for it," Wang told the Reuters Global Markets Forum.
Even as markets continue to agonize over the odds of a super-sized Fed rate cut, latest LSEG IRPR pricing for the Fed's first rate cut now show less than 60% probability in favor of a hefty 50-bp cut. That means around 40% are still betting on a 25-bp cut.
Analysts caution that an outsized move from the central bank could spook markets, already nervous about the overall health of the world's biggest economy.
Along with its monetary policy decision, the Fed will also release its dot plot and an updated Summary of Economic Projections (SEP), which are closely watched by financial markets to gauge future monetary policy moves such as rate hikes or cuts.
Wang said the dot plot is likely to disappoint markets as the number of cuts priced-in through next year is "too aggressive".
The dot plot is a graphical representation of interest rate projections made by members of the Federal Open Market Committee (FOMC) that indicate where each official thinks interest rates should be at the end of each year.
(Mehnaz Yasmin)
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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
AMID LAST WEEK'S BIG GAINS, BOFA CLIENTS WERE SMALL NET SELLERS - CLICK HERE
DISTRESSED DEBT PERFORMANCE TO IMPROVE, ALTERNATIVE ASSETS TO CROSS $30 TRLN BY 2030 - PREQIN - CLICK HERE
GETTING THE HOUSE IN ORDER: HOUSING STARTS/PERMITS, MORTGAGE DEMAND - CLICK HERE
WALL STREET STALLS AT STARTING LINE AS INVESTORS HOLD THEIR BREATH FOR FED - CLICK HERE
MOMENTUM OUT FRONT, BUT IS THERE A SHIFT AFOOT? - CLICK HERE
THE UNBEARABLE WRONG-NESS OF FED WATCHING - CLICK HERE
SOFT LANDING TO BENEFIT GROWTH STOCK LAGGARDS - UBS CIO - CLICK HERE
WHAT NEXT AFTER THE FIRST FED CUT? - CLICK HERE
ALL GOOD FOR EURO AREA LIQUIDITY… FOR NOW - CLICK HERE
NOVO WEIGHS, AWAITING THE FED - CLICK HERE
EUROPE BEFORE THE BELL: THE FED, MIDDLE EAST AND UK CPI - CLICK HERE
TRADERS STILL GUESSING IN FINAL FED COUNTDOWN - CLICK HERE
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