Wall St edges up on telecom gains; Fed meet in focus

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Wall St edges up on telecom gains; Fed meet in focus

However, Speizer said the main focus was on the Fed's interest rate decision, due at 1800 GMT on Wednesday, with no rate change the widely expected.

However, elsewhere in the region markets turned lower as traders cashed out.

"The probability of a December rate hike rose to 50%, too low to trigger a panic across the stock markets yet too high to be ruled out by the currency and money markets", she said.

"The market doesn't seem to have any strong risk-off sentiment, even after Trump's comments", said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

Likewise, by December the Fed may have a more dovish makeup, given that Vice Chair Stanley Fischer, a proponent of tightening, plans to step down next month. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. It has also trimmed its inflation forecast. This will be very welcome news to the more bullish members of the European Central Bank. But other regional indexes wavered, with South Korea's Kospi slipping 0.2 percent to 2,406.50.

Any reduction in the Fed's balance sheet could make it harder for banks and investors to borrow certain Treasuries in the repurchase agreement market, making it more difficult and expensive to bet on or protect against rate increases.

The market sentiment on the USA dollar was strong at the beginning of this week amid high expectations of a hawkish tone by the Fed in Wednesday's FOMC statement. The withdrawal of QE will mean that the supply of bonds will go up over time, other things remaining the same, which should increase USA bond yields.

Bond prices fell, sending yields higher.

"If you model it out, over about the next three years they'll take out about $1.3 trillion or so".

The central bank is also expected to announce plans to begin unwinding its $4.2 trillion portfolio of Treasuries and mortgage-backed securities, almost a decade after the global financial crisis. The Fed also revealed that it will begin shrinking its $4.5 trillion balance sheet in October, initially allowing $10 billion in bonds to roll off each month. Hong Kong's Hang Seng shed 0.7 percent to 27,908.64 and the Shanghai Composite fell 0.4 percent to 3,343.33.

"Keep in mind the yen is bouncing off of about a two-month low", Esiner said.

In July 2017, Federal Reserve maintained the target range for the federal funds rate at 1-1.25%. "So far, the market is taking it in stride, but I don't know if it should".

The euro rose 0.1 percent to $1.1999 while the yen rose 0.1 percent to 111.44 per dollar.

Futures for the Dow Jones Industrial Average inched up by 18 points to 22,316, while S&P 500 index futures climbed 1.50 points to 2,504.

Financial markets are largely subdued as investors remain cautious ahead of the Federal Reserve's announcement of its monetary policy meeting.

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