FOMC statement contained no great surprises - Westpac

Analysts at Westapc offered an Economic Wrap of the US session.

Key Quotes:

"The FOMC statement contained no great surprises. As expected it conveyed a more upbeat sentiment on the economy, with buoyant financial conditions post-Brexit and the strong run of US data in recent weeks ensuring that. Indeed, the Fed explicitly noted that, “Near-term risks to the economic outlook have diminished”, though they fell short of stating that the risks are balanced, a characterisation that has been notably absent for many months.  And, even as risks have diminished they still noted that, “The Committee continues to note that they will, “closely monitor inflation indicators and global economic and financial developments”, so it’s not entirely ”all clear” when it comes to the risks. Otherwise the statement opened with the observation that, “the labor market strengthened,” an upgrade compared to last month’s observation that, “the pace of improvement in the labour market has slowed.”  The Fed stuck with a bullish assessment of households, noting that “Household spending has been growing strongly,” while the heavily watered down observation that, “the drag from net exports appears to have lessened” has been completely removed. Otherwise, there are no significant changes. Kansas Fed’s George was a dissenter. Overall the statement reads like a central bank that is inching closer to pulling the trigger on rates but it lacks the strong  signals that were present in their Oct  2015 statement, which all but signalled a hike at the following Dec 15 meeting.

US durable goods orders fell by 4.0% in June (vs -1.4% expected). Net weaker orders and shipments at all levels, taking into account revisions. Core capital goods shipments were down 0.4ppts vs consensus +0.4%. This should cause a slight trimming of Q2 GDP estimates, the advance report of which is releasedon Friday

Economic Event Risks Today

Australian terms of trade for Q2, German CPI, and US jobless claims."