Waiting for the Fed Decision

Economic Data

- (IL) Israel Dec CPI Forecast: 0.6% v 0.7% prior
- (IL) Israel Nov M1 Money Supply Y/Y: 32.8% v 30.7% prior
- (US) MBA Mortgage Applications w/e Dec 12th: -3.3% v +7.3% prior
- (CZ) Czech Central Bank left both Repurchase Rate and EUR/CHF floor unchanged at 0.05% and 'around 27.00' respectively (as expected)
- (PL) Poland Nov Sold Industrial Output M/M: -7.5% v -6.9%e; Y/Y: 0.3% v 1.1%e; Construction Output Y/Y: -1.6% v -3.5%e
- (PL) Poland Nov PPI M/M: -0.5% v -0.2%e; Y/Y: -1.6% v -1.2%e
- (RU) Russia Nov Real Retail Sales M/M: +0.3% v -0.6%e; Y/Y: 1.8% v 1.1%e
- (RU) Russia Nov Unemployment Rate: 5.3% v 5.2%e
- (RU) Russia Nov PPI M/M: -0.5% v +0.2%e; Y/Y: % v 6.5%e
- (US) Nov CPI M/M: -0.3% v -0.1%e; Y/Y: 1.3% v 1.4%e
- (US) Nov CPI Ex Food and Energy M/M: 0.1% v 0.1%e; Y/Y: 1.7% v 1.8%e
- (US) Nov CPI NSA: 236.151 v 236.369e; CPI Core Index SA: 239.332 v 239.485e
- (US) Q3 Current Account Balance: -$100.3B v -$97.5Be
- (CA) Canada Oct Wholesale Trade Sales M/M: 0.1% v 0.2%e
- (US) DOE Crude: -0.85M v -2Me; Gasoline: +5.25M v +2Me; Distillate: -0.21M v +1e

US equity indices are shooting higher this morning and European markets have regained losses to close at their highs. Crude prices are up on the session and the Russians seemed to have arrested the plunge in the ruble for the moment. Now all eyes are on the Fed decision later today. As of writing, the DJIA is up 0.70%, the S&P500 is up 0.69% and the Nasdaq is up 0.70%.

Analysts are chalking up the big slip in US November CPI. The headline reading saw its biggest decline in nearly six years, but the core measure was up slightly. Note that gasoline prices fell 6.6% in November after a 3% drop in October. Gasoline prices have declined for five straight months.

Attention shifts from Russia and crude today over to the Fed decision and Chair Yellen's post-decision press conference. Many analysts think today will be the day the Fed drops the considerable time language from its policy statement. And even if it does not, it will likely indicate the key phrase is on its way out by introducing an alternative.

Crude appears to have taken a breather on its long, steady decline. Front-month WTI nosed above $57 midday yesterday, and then tested around $54.50 earlier this morning before trading back up to $56.20 as of writing. OPEC members have stated that they are ready to wait up to a year for prices to stabilize and there were also reports that two non-Gulf OPEC states are arguing that OPEC cannot simply cut production alone. Weekly API and EIA inventory numbers continue to widely miss expectations.

The ruble has regained some strength this morning after two days of nightmarish moves. USD/RUB has declined to around 60 after topping out yesterday at 78.60 on reports that the Russian government and the Russian Central Bank have worked out a strategy for girding the currency, although it remains unclear exactly what Moscow is planning. Note that the temporary stabilization in oil prices may be just as impactful. The Finance Ministry has started selling foreign currency from its balances on the market, although there have been no signs of central bank intervention today.

FedEx missed top- and bottom-line expectations by a hair in its second quarter earnings report this morning and shares of FDX are down 5.5% in the early going. UPS is down 2.5% in sympathy. Infrastructure engineering name MasTec is up more than 7% in the early going after trimming its FY15 earnings guidance but also raising its revenue outlook for the year.

Looking Ahead

- 14:00 (US) FOMC Interest Rate Decision: Expected to leave both upper and lower bound of Interest Rates unchanged between 0.00-0.25%
- 14:30 (US) Fed Chair Yellen holds post rate decision press conference
- 16:45 (NZ) New Zealand Q3 GDP Q/Q: 0.7%e v 0.7% prior; Y/Y: 3.3%e v 3.9% prior
- 22:45 (JP) Japan to sell 20-Year JGB Bonds