The markets remained cautious ahead of tomorrow’s Federal Reserve’s FOMC announcement. Investors will be looking for any change of language in the FOMC statements and forecasts that could give clues to the timing of tapering asset purchases. The Fed is not expected to announce tapering tomorrow. Still, the S&P drifted 0.31% lower to 1,781 while the 10-year Treasury fell 1.18% to 2.84%.
The consumer price index (CPI) came out today remaining flat month-over-month. Year-over-year, CPI rose 1.2%. Low inflation allows room for the Fed to continue its asset purchases at its current $85 billion rate. Redbook also came out with same-store tales rising 2.9% year-over-year. Redbook is a weekly measure of retail sales. The report has been viewed as weaker than expected by the market over the past two weeks. A positive came from the housing market index, which shot up to 58. This indicates home builders are feeling more confident about the new homes sales going forward.
Overall, this will be a very busy week with housing starts and the FOMC meeting announcement tomorrow, followed by jobless claims, the Philly Fed Survey, and existing home sales on Thursday. GDP will also be announced on Friday. Many investors are sitting on the sidelines waiting to see what happens before making major bets.