|US and Europe|
·US equities posted a third consecutive day of gains even as investors remained mostly on the sidelines ahead of the Fed’s policy statement on Wednesday. The Dow Jones Industrial Average index climbed 34.95 points to 15,529.73 and the S&P500 index rose 7.16 points to 1,704.76.
·Last August, US consumer prices crept higher by 0.1% month-on-month. This compared to the market estimate of a 0.2% rise, which was also the figure posted in July. Not including the more volatile food and energy categories, “core” prices likewise inched higher 0.1%. On an annual basis, overall prices rose 1.5%, slightly lower than the 1.6% market estimate and the 2.0% in July, but still higher than the recent low of 1.1% last April. Core prices also climbed 1.8% year-on-year. The uptick in inflation could support the Fed’s case for scaling back its bond purchases, especially as the figure nears the central bank’s target. According to the report, much of the rise was attributed to increased costs for shelter and medical care.
·Data released by the National Association of Home Builders (NAHB) showed that homebuilders’ confidence kept afloat, though slowed a little this month. According to the NAHB, its housing-market index stayed unchanged at 58 from July’s downwardly revised level. The figure was also in line with market estimate. Nevertheless, this was still the highest level since November 2005. In its report, the NAHB warned that home builders were seeing more hesitation from potential buyers, mainly due to the recent increase in mortgage rates.
·US Treasury prices climbed for a fifth consecutive day as investors anticipated the Federal Reserve to wind down its bond purchases, though at a lighter scale, following their meeting on Wednesday. The 10-year benchmark yield slipped 2.2 basis points to 2.85%.
·European shares were slightly lower amid cautious investing as uncertainty regarding the Fed’s upcoming policy announcement coincided with a drop in Continental auto sales. Strong German investor confidence data was mostly shrugged aside. The FTSEurofirst300 index gave back 5.79 points to 1,252.63.
·The euro posted modest gains on Tuesday following the release of stronger than expected German economic sentiment data. The monthly ZEW economic expectations indicator for German jumped to 49.6 in September, beating the market estimate of 46.0 and the 42.0 posted last August. This was the highest level since April 2010, and showed that investors and analysts were more optimistic about the economic situation moving forward. Note that the historical average for the measure is 23.8. The shared currency appreciated by 0.15 cents to EUR/USD1.3359.
·Asian markets reversed Tuesday as investors took caution ahead of the US Federal Reserve's policy meeting. The Federal Open Market Committee was set to hold a two day meeting Tuesday and Wednesday and decide on the Fed's planned withdrawal of its economic stimulus. Except for China, all markets traded within +/-1% from Monday's close. The MSCI All Country Asia Pacific Index waned 0.59 points, or -0.43%, to 138.13. China's Shanghai SE Comp Index fell -2.05% as ahead of the long weekend for the Mid-Autumn Festival which will start on Thursday.