Fed Meets Amid Elevated Rate Hike Expectations

(RTTNews) - The D-day is upon us, as the markets wait with bated breath whether the Fed will be moved into action by recent economic data, which vouch for a strong momentum. Fed speeches have left open the possibility of another 25 basis point-increase before the year end.

However, some analysts believe that a Fed hike might not move the market this time around, as they have begun discounting a huge stimulus injection from the incoming administration and further tax cuts. There a small move, the second in about 10 years may be shrugged off by the markets. Since things are still fluid concerning policies in the New Year, the Fed is unlikely to maneuver much with its forecasts.

Among the economic data released last week, the results of the Institute for Supply Management's national non-manufacturing survey showed optimism. The non-manufacturing index rose 2.4 points to 57.2 in November, while economists expected a more modest increase of 0.7 points.

The trade deficit for October widened more than expected to $42.6 billion from a deficit of $36.2 billion. This reflected a 1.8 percent drop in exports but a 1.3 percent increase in imports.

Non-farm productivity was up an unrevised 3.1 percent sequentially in the third quarter, marking the highest reading since the second quarter of 2015. Output increased 3.6 percent, but slower than the 3.8 percent increase in compensation. Unit labor costs were up 0.7 percent, more than the 0.3 percent increase estimated initially.

Jobless claims fell less than expected and factory orders for October rose in line with expectations. Preliminary consumer sentiment reading compiled by the University of Michigan climbed to 98 in December from 93.8 in November, while economists expected a reading of 94.1.

Click on for details on what to watch for on the Main Street front in the unfolding week: