Asia markets tread water as investors await news from the Fed

Weekly USDJPY

Central bankers have been in a bind over when to lift rates again. That would mean inflation would fall short of the Fed's 2 percent target for the sixth straight year.

Given how concerned some officials had been about inflation, there was clearly some money looking for a more dovish Fed than we saw.

U.S. Treasury yields rose, the dollar gained while U.S. stocks fell on Wednesday after the U.S. Federal Reserve signaled it expects one more interest rake hike by the end of the year. Traders will be listening for any indications that the central bank could move sooner on a rate increase and for details on the timing for when the Fed might start shrinking its multitrillion-dollar stockpile of bonds.

But these rather dramatic moves in bond prices are not harbingers of a more rapid sell-off as the Fed unwinds its bloated balance sheet. Markets are also waiting for any hints of a rate hike in December.

Following the recent slowdown in inflation the median projection of future hikes is likely to be somewhat downgraded, which may pressure the greenback lower this evening.

US equities bounced around the unchanged line on Wednesday in volatile trading after the Federal Reserve, as expected, announced it would begin winding down its bloated $4.4 trillion balance sheet in October. It is also expected to announce how the presumably very gradual unwinding of its vast, $4.5 trillion balance sheet will be structured in the months and years ahead. That figure would inch up by $10 billion each quarter until it reaches $50 billion in monthly reductions in October 2018. Toshiba stock was up 0.32 percent in early trade.

The Fed's statement yesterday also touched on the economic impact of Hurricanes Harvey and Irma-while devastating in the short-term, the Fed noted that the impact on the economy likely would be brief.

Tokyo was following Wall Street higher, as USA stocks logged fresh records in advance of this week's meeting of the Federal Reserve, which is expected to announce a drawdown of its massive bond holdings.

Odell Beckham Jr. goes through team drills with Giants
Two of those losses came at Arrowhead Stadium, which will be the site of Sunday's game against Philadelphia. Getting a healthy Beckham back would certainly help.

Financial markets interpreted the Fed statement as more hawkish than expected. That neutral rate dropped to 2.9 percent in the new forecast, down from 3 percent in the Fed's June forecast.

The pan-European FTSEurofirst 300 index .FTEU3 lost 0.18 percent.

The Dow, however, managed to climb to a fresh record after open, helped by Chevron's 0.9 percent rise.

Ahead of the US Federal Reserve's board meeting on Wednesday night, markets across the board were trading in relatively tight ranges.

Elevated risk appetite in Europe, meanwhile, saw the gap between Portuguese and Italian 10-year government bond yields narrow to levels not seen since the start of the euro zone debt crisis of 2010-2012.

Currently, inflation is signalling that the Fed should not increase the cost of borrowing.

The Fed is expected to slow their bond-buying program at around $US10 billion a month, ultimately rising to $US50 billion.

USA stock indexes were mostly higher in midday trading ahead of the Federal Reserve's latest economic and interest rate policy update.

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