Markets Await FOMC Decision

Economic data

- (UK) July CBI Industrial Reported Sales: 21 v 29e
- (US) MBA Mortgage Applications w/e July 24th: +0.8% v +0.1% prior
- (IE) Ireland July Consumer Confidence Index: 99.7 v 102.8 prior
- (ZA) South Africa Q2 Unemployment Rate: 25.0% v 26.5%e
- (BR) Brazil Jun PPI Manufacturing M/M: 0.3 v 0.1% prior; Y/Y: 6.6 v 6.1% prior
- (US) Jun Pending Home Sales M/M: -1.8% v 0.9%e; Y/Y: 11.1% v 11.1%e
- (US) DOE Crude: -4.2M v 0.0Me; Gasoline: -0.36M v 0Me; Distillate: +2.6M v +1.5Me

Trading volumes are above average this morning as US equities see modest gains. Market participants will be scrutinizing this afternoon's Fed statement for any scrap of information that could indicate the FOMC's thinking on the timing of future rate hikes. The 10-year UST yield is up nearly four basis points, around 2.286%. The DJIA is up 0.55%, the S&P500 is up 0.40% and the Nasdaq is up 0.20%.

After dropping below $47 yesterday morning, WTI crude is climbing higher and is poised to retake $49 in the wake of weekly inventory reports. Both the API and DoE data returned to showing inventory drawdowns after surprise builds in the prior week's reports. Brent is just below $54. Hess Corp was the first major US energy firm to report June quarter earnings, with the quarterly loss lower than expected and revenues better. Other US oil majors report later this week.

Just when markets considered Greece fixed for now, there have been rumblings of a new political crisis in Athens. Press reports suggest that EU officials are pressing the government to agree to more than was in the preliminary package earlier this month, prompting pushback from PM Tsipras. Reportedly he plans to meet with left-wing Syriza rebels and is threatening snap elections if future votes go against the government. EUR/USD is well off the two-week highs around 1.1130 seen on Monday, trading around 1.1019 this morning.

Shares of Twitter are just about at their lows this morning, down more than 13%, after last night's problematic earnings report. The firm beat expectations and saw advertising revenue grow 63% y/y, however a shortfall in user growth - 304M v 310Me, a growth rate that was 12% y/y - spooked investors and prompted analysts to cut the name. Social media name Yelp is down 27% today after very weak earnings out yesterday, knocking its shares down to a two-year low.

Northrop Grumman and General Dynamics are both up about 5% a piece in the early going after both firms firmly beat earnings expectations and raised their FY guidance. Goodyear was up nearly 8% in the first minutes of cash trading before rapidly dropping back to +3% as the conference call wound on and executive made cautious comments about tire sales heading into the winter season.

Trading has been volatile in MasterCard after earnings. The firm's second-quarter EPS and revenue results were right in line with expectations, while purchase volumes were still up by double digits. Nevertheless, executive warned that FY revenue growth would be at the low end of its three-year projections. Shares of healthcare giants Humana and Anthem are not seeing much in the way of volume after largely in-line earnings. HUM is off about 0.5%

Looking Ahead

- 13:00 (US) Treasury to sell $35B in 5-Year Notes
- 14:00 (US) FOMC Interest Rate Rate Decision: expected to leave policy unchanged between 0.00-0.025%
- 18:00 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to raise Selic Rate by 50bps to 14.25%
- 18:45 (NZ) New Zealand Jun Building Permits M/M: No est v 0.0% prior
- 19:50 (JP) Japan Jun Preliminary Industrial Production M/M: +0.3%e v -2.1% prior; Y/Y: +1.3%e v -3.9% prior