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Central Bank Developments Are Only Game In Town For Markets


marketwatch-articleThe following is an excerpt from Wallace Witkowski | September 18, 2016 | marketwatch.com |

U.S. stocks will be taking cues from central bankers more than usual in the coming week as investors await pronouncements from the Federal Reserve and clarification on the Bank of Japan’s easing efforts.

Stocks preserved weekly gains on Friday amid a selloff, with the Dow Jones Industrial DJIA, -0.49% ending the week up 0.2%, the S&P 500 index SPX, -0.38% rising 0.5%, and the Nasdaq Composite Index COMP, -0.10% surging 2.3%.

Mixed economic data gives both Fed hawks and doves support for their arguments on whether to start raising rates as soon as possible or to keep playing the waiting game. The probability of a Fed rate hike at the September meeting is running at a scant 15%, according to the CME Group’s FedWatch Tool.

Just as the Fed begins their two-day policy meeting, the Bank of Japan will be announcing its policy decision affecting the easing program. That follows a week of anxiety following comments from European Central Bank President Mario Draghi that the ECB might not extend its bond-buying program and concerns that the BoJ is losing enthusiasm for theirs too, ramping up an aversion to risk.

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