US futures move higher ahead of Fed meeting

US futures move higher ahead of Fed meeting

After weeks of speculation the Fed is expected to announce at the end of its meeting on Wednesday that it will start tapering off asset purchases in September, cutting back from $ 85 billion per month to $ 70-$ 75 billion.

“We continue to think that the FOMC (Federal Open Market Committee) will announce a reduction in those purchases on Wednesday,” said Capital Economics analysts in a research note.

“Given how far bond yields have risen in recent months in response to this prospect, we doubt that there would be a particularly adverse market reaction. Indeed, we wouldn’t be surprised if yields fell back a bit more in the coming months. Nonetheless, we still think that yields will ultimately drift slowly up again over the next couple of years as the Fed gradually becomes less accommodative.”

(Read more: Questions over Fed chief a bigger issue than taper)

In the meantime, the Fed will purchase $ 1.25-$ 1.75 billion of 23-30-year Treasury notes on Tuesday. Plus, the Treasury Department will hold its weekly sale of 4-week bills at 11:30 a.m. ET.

Data-wise, the Consumer Price Index (CPI) for August will be reported at 8:30 a.m. on Tuesday, followed by Treasury international capital flows at 9 a.m. and the National Association of Home Builders (NAHB) survey at 10 a.m.

In addition, Treasury Secretary Jack Lew will speak on the economy at the Economic Club of Washington at 8:15 a.m.

Tuesday will be a quiet day for earnings, with just FacSet and Coty due to report ahead of Wall Street’s open. Adobe Systems will publish numbers after the close of trade.

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