Market Overview: Markets are still digesting last week’s FOMC meeting, which saw the committee decide to keep rates steady-for now-by a vote of 7-3. Markets are, however, preparing for a December interest rate hike from the central bank, and it remains to be seen if such a move by the Fed has been fully discounted by markets. Now that the FOMC and Bank of Japan meetings are out of the way, investors will likely turn their attention to the Presidential race, and many will tune into tonight’s first debate between Hillary Clinton and Donald Trump. This debate could potentially fuel some market volatility if Mr. Trump has a strong showing. There seems to be a general consensus that a Trump Presidency would bring with it many unknowns for the economy and foreign policy, and that could potentially fuel some investor anxiety.
Key Data Points: The latest reading on New Home Sales is due out later this morning, with consensus estimates looking for a reading of 598,000.
The latest reading of the Dallas Fed Manufacturing Survey will also be seen today.
Markets will also have plenty of other data to chew on this week including Consumer Confidence, Case-Shiller HPI, Durable Goods Orders, Weekly Jobless Claims, GDP, Pending Home Sales Index and more.
Investors will likely watch the data stream closely, as any significant misses do have the potential to weigh on the Fed’s decision regarding rates.
Outside Markets: Stocks are lower today but not far from recent highs. Although the Fed’s decision to hold rates steady is likely seen as a positive for stocks, investors may also begin to get more anxious over the upcoming Presidential election as well as the health of the global economy.
Crude oil is higher in early action today as investors get ready for this week’s OPEC meeting. It remains to be seen if a deal will be reached to freeze or cut oil production to stabilize prices.
The Big Picture: With the Fed likely to raise rates at a very slow and incremental pace, and other global central banks likely to continue with various easing measures, the backdrop for gold and precious metals remains supportive. Gold has been making lower highs, however, in what could potentially be an indication of weakness. The bulls will have to make a run at post-Brexit highs soon, otherwise selling pressure may continue to mount as longs throw in the towel. The gold market may have discounted a 2016 hike by the Fed at this point, however, and could potentially see additional buying interest in spite of a rate hike. It would seem, however, that currently the gold market is lacking any fresh inputs to drive prices higher. A tight Presidential race, however, could possibly ignite renewed demand for gold and other perceived safe haven assets.
