Investing.com - Here are the top five things you need to know in financial markets on Wednesday, December 13:
1. Fed set to hike with eyes on dot plot
All eyes will be focused on the Federal Reserve on Wednesday as the U.S. central bank is widely expected to raise the fed funds target range by a quarter point at 2:00PM ET (19:00GMT).
According to Investing.com’s Fed Rate Monitor Tool, Fed fund futures fully price in the increase to a range between 1.25%-1.50%.
In that sense, markets will play close to attention to Fed chair Janet Yellen’s press conference 30 minutes after the release of the Fed's statement, as investors look for fresh clues on the likely trajectory of monetary policy in the months ahead.
Along with its latest "forecasts" for economic growth and inflation, the Fed will also release its projections for interest rates, known as the "dot-plot". Last time, the Fed had forecast three rate rises for next year, and it is expected to keep its outlook about the same even though the market has been skeptical it will hike as much as it expects.
Of note, those projections may be short-lived with the December meeting widely expected to current Fed chair’s last. Yellen has indicated that she will resign once Jerome Powell is sworn in to replace her at the helm. Powell awaits a full Senate confirmation expected in the coming weeks. With the next Fed policy meeting scheduled for January 30-31.
2. Inflation to be Fed’s latest data check before hike
On Wednesday’s economic data front, the consumer price index (CPI) for November will be released at 8:30AM ET (13:30GMT).
Headline inflation is expected to rise to 2.2%, with core forecast to stand pat at 1.8%. This will be the last data piece for the Fed to contemplate before moving ahead with their rate decision.
The dollar held mostly steady in early trade on Wednesday as investors showed caution ahead of the data and, particularly, the Fed outlook.
At 6:01AM ET (11:01GMT), the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slipped 0.07% at 93.99.
3. Trump remarks on taxes on tap
U.S. President Donald Trump is scheduled to deliver remarks on tax reform at 3:00PM ET (20:00GMT).
According to Bloomberg, Republican Senator John Cornyn said on Tuesday that lawmakers may have a tentative tax deal on Wednesday.
Though both the House and Senate have passed tax bills, Republicans must push for a joint proposal to be sent to Trump for the President to sign into law.
Also in focus, Doug Jones won a bitter fight against Trump-backed Republican Roy Moore for a Senate seat, making him the first Democrat to win that post in a quarter of a century. The victory will trim the Republic’s majority in the Senate to just 51 versus 49, suggesting a tougher fight for Trump to advance his policies.
4. Global stocks remain near record highs
Global stocks hovered near record highs on Wednesday as global investors kept close watch over U.S. tax reform and a busy week for central bank policy.
U.S. futures pointed to a cautious open on Wednesday as traders waited for the Fed’s rate hike and outlook. At 6:01AM ET (11:01GMT), the blue-chip Dow futures edged forward 15 points, or 0.06%, S&P 500 futures inched up 1 point, or 0.02%, while the Nasdaq 100 futures advanced 10 points, or 0.15%.
European equities underwent mixed trade as market participants prepared for local monetary decisions from both the European Central Bank and the Bank of England on Thursday. At 6:02AM ET (11:02GMT), the benchmark Euro Stoxx 50 slipped 0.03%, Germany’s DAX dropped 0.15%, while London’s FTSE 100 edged forward 0.07%.
Earlier, Asian shares gave mixed readings on Wednesday with the Shanghai Composite up 0.7%, as Japan’s Nikkei 225 took a hit from concern over U.S. tax reform plans as the news that Doug Jones won the Alabama Senate seat hit the wires.
5. Oil prices rebound on inventory draw hopes
Crude oil prices recovered from the prior session’s losses as market participants places bets that a sizeable drawdown would be shown in weekly stockpile data.
After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories dropped by nearly 7.4 million barrels last week. That compared with analysts' expectations for a decline of around 3.8 million barrels.
The U.S. Energy Information Administration will release its official weekly oil supplies report for the week ended December 8 at 10:30AM ET (15:30GMT).
The decrease in inventories may well help to offset concern that the U.S. shale producers may drive prices lower with increased production. All this even on the back of news that the U.S. exported more hydrocarbons than ever before in 2017 and shows no signs of slowing down, even while OPEC and other major oil producers continue efforts to curb their own output and restabilize the markets.
Ahead of the Wedensday's data, U.S. crude oil futures rose 0.72% to $57.55 at 6:03AM ET (10:03GMT), while Brent oil traded up 1.01% to $63.98.