Precious metals began Wednesday trending upward, but by the middle of the day and as of the writing of this post, things mostly evened out. Today is an especially important day for investors the world over simply because the FOMC will be concluding their latest meeting. The first half of this week has seen investors mainly hold their positions ahead of the FOMC meeting and Scotland’s referendum vote, but by tomorrow I expect that the global marketplace will be abuzz with activity.
The geopolitical front has been mostly quiet this week, though there have been some verbal developments with regard to the United States’ involvement in the fight against ISIS/ISIL rebels in Iraq and Syria. Just last week, US president Barack Obama announced that the United States would be stepping up its use of air power and air strikes against ISIS. This news was not unexpected and didn’t have too much of an impact on the market. This week, however, some high-ranking US military officials were heard alluding that the use of US ground forces against ISIS is still not out of the question. Though no one outright said the US military will be on the ground in Iraq again, some people interpreted it that way. As such, it will be interesting to see how the situation with ISIS develops over the coming weeks and months.
Markets Moving Mostly Sideways Ahead of FOMC Statement
There is no doubting that this week’s biggest event will come today in the form of the conclusion of the latest FOMC meeting and post-meeting statement made by Fed chairperson Janet Yellen. Investors are so concerned with this month’s Federal Open Market Committee meeting simply because everyone wants to know what the future has in store for interest rates in the US. As you may or may not be aware, the last few months have seen investors almost wholly preoccupied with when the Federal Reserve will raise interest rates. In the eyes of almost everyone, rate hikes are inevitable, but real questions that need to be answer are with regard to when rates will be raised, and by how much.
When Janet Yellen addresses the media later this afternoon, the overriding hope will be that she lays out a clear, concise timeline for the raising of interest rates; especially as it relates to the winding down of Quantitative Easing. While no one can say for sure whether Ms. Yellen’s comments will provide any further detail regarding the future of interest rates, the upward movement of US equities and precious metals over the first few days of this week suggest that some investors are betting that little information will be found out about interest rates, and that rate hikes are still a good while away.
The duration of this afternoon stands the chance of being incredibly telling about the future of monetary policy, but there is no guaranteeing that the FOMC will make any major announcements. As we look ahead to tomorrow and the final day of the week, all eyes will turn to Scotland where a single Yes or No vote will determine whether the country becomes independent of UK rule or if they will remain under the Crown’s control. It may not seem like it, but the result of the referendum vote will have a potentially huge impact on the British Pound as well as the overall European and British economies.