LDN - Business

Futures flat after Fed signals third rate hike this year

[September 21, 2017] By Tanya Agrawal

(Reuters) - U.S. stock index futures were little changed on Thursday, a day after the Federal Reserve signaled that it could raise interest rates for the third time this year despite low inflation and disclosed plans to shrink its balance sheet.

* The Fed, as expected, said it would begin to reduce its approximately $4.2 trillion in holdings of U.S. Treasury bonds and mortgage-backed securities - acquired in the years after the 2008 financial crisis - from October.

* While the central bank left rates unchanged, it cited low unemployment, growth in business investment and an economic expansion that has been moderate but durable this year to build its case for another rate hike in 2017.

* Interest rate futures are now pricing in about a 70 percent chance of a December hike, according to CME's FedWatch tool, up from above 50 percent prior to the Fed meeting.

* Fed Chair Janet Yellen said the fall in inflation this year remained a mystery, adding that the central bank was ready to change the interest rate outlook if needed.

* Benchmark U.S. Treasury yields jumped to their highest levels in six weeks on Wednesday, while the dollar index <.DXY> hit a two-week high.

* The S&P and the Dow ended slightly higher on Wednesday, adding to their string of closing records, while the tech-heavy Nasdaq ended slightly lower weighed down by Apple <AAPL.O>.

* U.S. stocks have continued to climb this year, with the S&P up about 12 percent so far, helped by strong corporate profits and optimism that U.S. President Donald Trump will cut business taxes.

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A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 8, 2017. REUTERS/Brendan McDermid

* Economic data at 8:30 a.m. ET (1230 GMT) is expected to show that the number of Americans filing for unemployment benefits have increased by 6,000 to 263,250 for the week.

* Oil prices were slightly lower but held most of their recent gains before a meeting of oil producers that could extend production limits aimed at clearing a glut that has depressed the market for more than three years.

* Shares of Calgon Carbon soared 59.1 percent in premarket trading after Japanese chemical manufacturer Kuraray agreed to buy the carbon materials firm for $1.107 billion.

* U.S.-listed shares of Deutsche Bank were down 2.4 percent after Morgan Stanley cut the stock's price target.

Futures snapshot at 6:56 a.m. ET:

* S&P 500 e-minis were down 0.5 points, or 0.02 percent, with 112 contracts changing hands.

* Nasdaq 100 e-minis were down 2.75 points, or 0.05 percent, in volume of 27 contracts.

* Dow e-minis were down 10 points, or 0.04 percent, with 4 contracts changing hands.

(Reporting by Tanya Agrawal; Editing by Arun Koyyur)

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