Fed Asset-Shrinking to Start Next Month

According to Fed officials' projections, the core PCE index is expected to rise 1.5 percent this year and 1.9 percent next year, separately lower than the 1.7-percent and 2-percent forecasts in June. As the bonds mature, the government pays the face value to the Fed.

LONDON, Sept 20 (Reuters) - The dollar edged towards 2-1/2-year lows hit earlier this month on Wednesday, as investors waited to see whether USA ratesetters would signal tighter policy or hold off because of tepid inflation data.

CPI rose 0.4 percent last month, and the index for the latest 12 months accelerated to 1.9 percent. It later edged back slightly to 112.540 yen, still 0.3 percent up on the day.

At 11:02 a.m. ET, the Dow Jones Industrial Average was down 1.88 points, or 0.01 percent, at 22,368.92, the S&P was down 1.73 points, or 0.07 percent, at 2,504.92 and the Nasdaq Composite was down 26.50 points, or 0.41 percent, at 6,434.82.

WORLD ECONOMY: The Organisation for Economic Co-operation and Development maintained its global growth forecast for this year at 3.5 percent and next year's but lifted next year's to 3.7 percent.

General Mills was down about 5 percent after its quarterly profit missed estimates, hurt by lower sales of its yogurts and cereals in North America.

Asian shares hit a decade high on Monday and the dollar hovered around an eight-week peak against the yen, in the start to a week in which the Fed is likely to announce balance sheet tapering. That means the OECD is expecting eurozone growth this year to match the USA rate, which it left unchanged.

The S&P 500 is up 8.01 points, or 0.3 percent.

But Satyam Panday, senior economist at Standard & Poor's, told AFP this one-off pop in the Consumer Price Index should not obscure the larger reality.

Japanese traders led fresh gains across most Asian markets on Tuesday following yet another record close in NY, with the dollar clawing back some of its recent losses on renewed hopes for Donald Trump's economic agenda. The report pulled down homebuilder shares. Raymond James Financial rose $1.15, or 1.4 percent, to $82.32.

Energy stocks also rose as oil prices headed higher. ConocoPhillips gained 1.3 percent. CalAtlantic Group fell the most, shedding 97 cents, or 2.7 percent, to $34.60.

"Recent happenings have seen Trump's leadership change and it is clear markets are seeing that", he added. Natural gas declined 3 cents to $3.09 per 1,000 cubic feet. In other precious metals, silver and platinum were both 0.5 per cent lower at $17.13 and $954.99 an ounce, while palladium lost 0.6 per cent at $930.13.

If the $2.5 trillion reduction from $4.5 trillion to $2.0 trillion were to hold up, it would require ceasing reinvesting the principal and interest payments entirely.

Markets overseas were mixed Wednesday. The FTSE 100 index of leading British shares was flat.

The Australian dollar was up around half a percent at $0.8047 after comments overnight from its central bank outlined the constructive growth conditions for its economy.

  • Zachary Reyes