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September 11, 2015

Equities Fluctuate, Treasuries Rally Ahead of Next Week's Much-Anticipated FOMC Meeting

Stocks fluctuated while Treasuries rallied across the curve amidst uncertainty ahead of next week’s FOMC meeting.  Recent US data has painted a mixed picture, further complicating the Fed’s decision.  In the past few days, economic releases have shown a record number of job openings and a decline in unemployment claims, which indicates a firming labor market, but we’ve also seen producer prices unchanged, pointing to a lack of inflationary pressures, and consumer sentiment at its lowest level since September of last year.  There aren’t any significant economic releases prior to next week’s meeting, so from a data perspective, the Fed policy makers already has the majority of the information they will be receiving.  They have also recently acknowledged the volatility of global equities and the slowdown in China and other emerging markets, which will weigh on their decision.  

Oil prices remain a widely discussed topic, with Goldman warning that a global supply glut could drive prices as low as $20 per barrel (the price of oil for most of the 90s).  It’s not their base-case, but they feel a failure to reduce production coupled with slowing demand could cause prices to fall that low.  Goldman reduced their 2016 forecast for WTI crude to $45 per barrel from $57 previously.

Have a great weekend.

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