All eyes are on the Federal Reserve’s Wednesday, meeting where a rate hike is expected.
Fed goal is to signal an ‘unhurried’ pace of interest-rate hikes
By Greg Robb
The Federal Reserve will raise its short-term target rate while trying to keep markets calm by signaling future interest-rate hikes will come at an “unhurried” pace.
The market has already priced in a decision by the Fed to raise the target range of the federal funds rate by 25 basis points to a range of 1.75% to 2%. This will be the second rate hike this year and the seventh move since the start of the tightening cycle.
The interest-rate decision will come at 2 p.m. Wednesday after two days of talks. The Fed will also release updated economic forecasts for the economy and interest-rate policy, and Chairman Jerome Powell will hold a press conference.
Stronger dollar to boost purchasing power
As the Fed continues to boost rates (and with the outlook for more rate hikes to come), the U.S. dollar gets more support. Ultimately, that means more purchasing power with the greenback compared with other currencies.
Predicting moves in the foreign exchange market is difficult, but Snaith and other economists say the dollar could strengthen further as the Fed boosts rates.
Microsoft Shares Seen Rising 10% to New Record
By Michael Kramer
Microsoft Corp. (MSFT) options traders are betting the shares rise by nearly 10% by the middle of September. The optimism comes despite the stock’s massive gains over the past year, with shares of the stock rising by almost 40%. If Microsoft’s stock rises, traders are betting it would take the stock to a record high.
The optimism for the stock comes on the back of strong earnings and revenue forecast for the coming year. Microsoft reported fiscal third-quarter 2018 earnings that easily topped estimates by nearly 12%, while revenue beat by almost 4%.
- Microsoft is still undervalued.
- Microsoft remains highly ambitious and determined to grow its cloud market.
- Microsoft has many ways to reward shareholders, including a share repurchases plan.
British Pound Forecast: Heavyweight Data to Dictate GBP Direction
By Justin McQueen, Market Analyst
On Wednesday, inflation figures will be reported, whereby the headline rate is seen rising 0.1ppt to 2.5%, while the core figure is expected to stay at 2.1%. There is potential for an upside surprise in the headline reading amid the surge in energy prices, as such this would likely see GBP push higher, given that inflation will move further away from the BoE’s remit. Reminder, BoE’s Ramsden stated last week that rate hikes will be warranted if inflation is persistently above 2% target.