Day Ahead - Top 3 Things to Watch

Investing.com - Here’s a look at three things that could rock markets tomorrow.

1. It’s Fed Day and Suddenly a Rate Cut Is in Doubt

The Federal Open Market Committee will announce its decision on interest rates tomorrow and what looked like a foregone conclusion at the start of the month has turned into a dead heat.

There is now just a 53% chance that the Fed will cut rates by a quarter point to a range of 1.75% to 2%, according to Investing.com’s Fed Rate Monitor Tool.

Chances had been well above 90% for most of the time after the Fed’s last cut.

A few things changed in the landscape, such as a slight thaw in trade relations between the U.S. and China, a sharp rebound in Treasury yields, upbeat economic data and a move back to risk assets by investors.

That would usually be enough to for the FOMC to keep rates on hold. But now there’s political pressure on the rate-setting committee and especially Fed Chairman Jerome Powell.

President Donald Trump has called for negative rates from the Fed, who are “boneheads” according to the president, so that the U.S. can refinance its debt obligations (something easier tweeted than done).

The FOMC statement arrives at 2 PM ET (18:00 GMT), and Powell will hold his press conference at 2:30 PM ET.

2. Housing Starts, Permits for August on the Calendar

Ahead of the Fed the market will get some more insight into the state of the U.S. housing market.

The Commerce Department will report numbers on August housing starts and building permits at 8:30 AM ET (12:30 GMT).

Housing starts are predicted to show 4.5% rise to an annual rate of 1.25 million, according to economists’ forecast compiled by Investing.com.

Building permits, an indication of future demand, are seen ticking down slightly to an annual rate of 1.31 million.

Shares of home builders have been strong in 2019, along with companies that support residential housing, including Home Depot Inc (NYSE:HD), Lowe’s Companies (NYSE:LOW) and Whirlpool Corporation (NYSE:WHR).

3. Inventories on Tap After Oil Volatility

After the Saudi oil attacks, which led to a more-than-14% jump and 5% tumble in crude prices back to back, we have the U.S. Energy Information Administration’s weekly report.

The last three reports in this series have been spectacular for their crude draws totaling nearly 22 million barrels in all, as well as weekly crude exports at a steady clip of 3 million barrels.

At 10:30 AM ET (14:30 GMT), the EIA will issue its assessment of U.S. oil inventories for the week ended Sept 13.

Analysts are predicting a drawdown of about 800,000 barrels for oil.

Last week, the EIA reported a crude drawdown of 6.9 million barrels, a gasoline stockpile drop of 680,000 and a distillates build of 2.7 million.

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