FOMC meeting and major technologies in Washington – What to know in the coming week

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Investors will turn to Washington as the FOMC prepares for its two-day meeting and representatives of major technology companies travel to Capitol Hill to testify.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "After reducing short-term interest rates for the & nbsp;first time since the financial crisis, the FOMC is expected to cut rates by an additional 25 basis points at this week's meeting. While geopolitical uncertainty persists, most economists agree that a 50 basis point cut is unlikely. "Data-reactid =" 16 "> After reducing short-term interest rates for the first time since the financial crisis, the FOMC is expected to cut rates by an additional 25 basis points at this week's meeting Even if geopolitical uncertainty persists, most economists agree that a 50 basis point cut is unlikely.

"The Fed is almost certain to cut its key rate by an additional 25bp at next week's FOMC meeting at a rate of between 1.75% and 2.00%," Capital Economics wrote in a note on Friday. "But the rise in underlying inflation, still-strong incoming activity data, and the temporary thaw of the US-China trade war, support our view that the Fed will then skip a meeting, before cutting rates one last time in December. "

While economists and the market agree on a reduction of 25 basis points this week, opinions are divided on the evolution of the Fed's monetary policy for the rest of the year. JPMorgan economists say that after this week's rate cuts, no further cuts are expected this year; However, Capital Economics estimates that another cut in December is imminent. The message from the Fed will be critical for the markets.

Given the two dissensions expressed at the FOMC meeting in July, it is clear that policymakers are in conflict.

"We expect dissent, potentially from both sides," Bank of America said in a note on Friday. "We think it's very likely that George (Fed) Kansas City and Rosengren (Boston) are dissident in favor of unchanged rates. The outlook has not changed enough to convince them of the need for further cuts. It is possible that the Bullard of the St Louis Fed, also opposed to a dovish, is favorable to a reduction of 50 basis points. We suspect it will be OK with a 25bp cut and conciliatory language in the statement, but this remains an exceptional risk. In any case, the dissidents will emphasize that a division remains within the Committee. It is up to Fed Chairman Powell to give the dovish tone expected by the market. "

In addition, the message and tone of Fed Chairman Powell will be closely monitored at the press conference following the FOMC decision. "The press conference itself is difficult to predict," wrote UBS on Friday in a note. "We expect Powell to want to sound slightly dovish in order to maintain a trend of easing. This will preserve market prices, which, according to Powell, has led to a relaxation of financial conditions this year. "

In addition, on Wednesday at 10 am, leaders of major technology companies will travel to Capitol Hill to testify before the Senate Committee on Commerce. Monika Bickert, Head of Global Strategy Management for Facebook, Nick Pickles, Director of Public Policy for Twitter, and Derek Slater, Global Director of Information Strategies for Google, to attend hearing on the proliferation of extremism online and how technology companies are collaborating with law enforcement.

Meanwhile, stir for commodities. Oil will be closely monitored after the attacks on Saudi Arabia's oil production facilities in Abqaiq and on an oil field in Khurais on Saturday. Abqaiq is the largest oil processing plant in the world, and the attack will leave about half of the oil capacity of the paralyzed kingdom. According to S & P Global Platts Analytics, oil prices could reach 70 to 80 dollars a barrel as a result of the attack. Houthi rebels in Yemen have claimed responsibility for the attacks; However, the United States suspects that the attacks have probably originated in Iraq or Iran. As new developments emerge, market watchers can expect increased volatility in oil markets this week.

While the corporate earnings release schedule remains light, investors can expect quarterly financial results from Adobe, Chewy and FedEx this week.

Economic calendar

On Monday: Empire Manufacturing, September (4.0 expected, 4.8 in August)

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Tuesday: Monthly industrial production, August (0.2% forecast, -0.2% in July); Capacity utilization, August (77.6% forecast, 77.5% in July); Net long-term ICT flows, July (previously $ 99.1 billion); Total ICT net flows, July (US $ 1.7 billion before) "data-reactid =" 42 ">Tuesday: Monthly industrial production, August (0.2% forecast, -0.2% in July); Capacity utilization, August (77.6% forecast, 77.5% in July); Net long-term ICT flows, July (previously $ 99.1 billion); Total net ICT flows, July ($ 1.7 billion before)

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Wednesday: MBA mortgage applications, week ended September 13 (2.0% before); Building permits, August (1.307 million euros expected, 1.317 million in July revised); Housing starts, August (1,250 million expected, 1,191 million in July) "data-reactid =" 43 ">Wednesday: MBA mortgage applications, week ended September 13 (2.0% before); Building permits, August (1.307 million euros expected, 1.317 million in July revised); Starts, August (1.250 million expected, 1.191 million in July)

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Thursday: Current account balance, Q2 (- $ 125.7 billion forecast, – $ 130.4 billion in the first quarter); Philadelphia Fed Outlook, September (11.0 expected, 16.8 in August); Initial jobless claims, week ended September 14 (215,000 planned, 204,000 previously); Continuing claims, week ended Sept. 7 ($ 1,670 million previously); Bloomberg Consumer Comfort, week of September 15 (63.2 hours before); Advanced index, August (0.1% expected, 0.5% in July); Existing home sales, August (-0.9% expected, 2.5% in July) "data-reactid =" 44 ">Thursday: Current account balance, Q2 (- $ 125.7 billion forecast, – $ 130.4 billion in the first quarter); Philadelphia Fed Outlook, September (11.0 expected, 16.8 in August); Initial jobless claims, week ended September 14 (215,000 planned, 204,000 previously); Continuing claims, week ended Sept. 7 ($ 1,670 million previously); Bloomberg Consumer Comfort, week of September 15 (63.2 hours before); Advanced index, August (0.1% expected, 0.5% in July); Existing home sales, August (-0.9% expected, 2.5% in July)

Friday: N / A

Earnings calendar

On Monday: N / A

Tuesday: Adobe (ADBE); Soft (CHWY); FedEx (FDX) after the close of the market

marketWednesday: General Mills (GIS) before the opening of the market

marketThursday: Darden Restaurants (DRI) before the opening of the market

Friday: N / A

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Heidi Chung is a Yahoo Finance journalist. Follow her on Twitter: @heidi_chung."data-reactid =" 66 ">Heidi Chung is a Yahoo Finance journalist. Follow her on Twitter: @heidi_chung.

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