Financial Markets Daily Report
17 septiembre 2020

Markets started on a positive note but risk aversion took over as the Fed signaled that the outlook is highly uncertain.

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  • Markets started on a positive note but risk aversion took over as the Fed signaled that the outlook is highly uncertain.
  • The Fed expects to keep rates at current lows until the labor market achieves maximum employment and inflation has risen to (and is set to temporarily exceed) 2%. Projections hinted this won't be before 2024. This was supported by its strategic review –together with an incomplete recovery, downside risks and disinflationary pressures.
  • Asian and European stocks advanced but U.S. equities erased earlier gains and closed lower after the Fed's meeting. The USD strengthened moderately and U.S. sovereign yields ticked up while euro area sovereign yields nudged down.
  • Brent oil prices jumped above $40 after a 4.4 million barrel decline in U.S. inventories last week (likely reflecting the restart in refineries following Hurricane Laura). Inventories remain about 14% above their 5-year average.
  • This morning the Bank of Japan left its policy stance unchanged, and the Bank of England will meet later today.
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