Here are the top five things you need to know in financial markets on Friday, September 16:
1. Summers sees no compelling case for Fed rate hike
Former U.S. Treasury Secretary and White House economic adviser Larry Summers stated late Thursday that inflation and economic conditions stateside provided no reason for the Federal Reserve (Fed) to hike interest rates next week.
“I think there’s no compelling case of any kind for a rate increase in September,” Summers said in an interview on BloombergTV focused on a paper suggesting that regulatory measures have done little to increase the safety of major financial institutions.
Markets appeared to agree with Summers’ outlook for U.S. monetary policy with Fed fund futures pricing in only a 9% chance of a hike next week, according to Investing.com’s Fed Rate Monitor Tool.
2. Inflation and consumer sentiment on tap
A deluge of data pushed rate hike odds lower in the prevision session, while market participants looked ahead on Friday to the last two major pieces of the puzzle for the Fed to digest before announcing its policy decision next Wednesday.
Barring some housing market data at the beginning of next week, August inflation data, out at 8:30AM ET (12:30GMT), and the Michigan consumer sentiment for September will be the last two key factors that could influence the Fed’s decision.
Markets expect consumer price inflation (CPI) to inch forward to 1.0% on an annualized basis with the core CPI standing pat at 2.2%.
Meanwhile, consumer sentiment is expected to improve from 78.7 to 79.3 in the preliminary reading for this month.
3. Deutsche Bank slumps 7% on $14 billon DoJ fine
Shares in Deutsche Bank AG NA O.N. (DE:DBKGn) tumbled more than 7% on Friday after the U.S. Department of Justice (DoJ) slapped the German financial institution with a $14 billion fine to settle an investigation into its selling of mortgage-backed securities in the run-up to the financial crisis.
Deutsche Bank said Friday it has no intention of settling the claims at the mentioned figure.
4. Global stocks mixed ahead of Friday’s data with eyes on Fed impact
Global stocks were mostly mixed on Friday as investors waited for data stateside to gauge their possible impact on the Fed’s policy decision next week.
U.S. futures pointed to a slightly lower open on Friday as investors took profit after the prior session’s solid 1% advance. At 5:50AM ET (9:55AM ET), the Dow Jones Industrial Average futures pointed to a 0.17% loss, S&P 500 futures fell 0.18%, while the Nasdaq 100 futures indicated a 0.11% decline.
European stocks were mostly lower as the Deutsche Bank fine weighed on the financial sector.
Earlier, Asian shares ended higher in holiday-thinned trade, as investors remained cautious before the Federal Reserve and the Bank of Japan policy setting meetings next week. Markets in China, Taiwan and South Korea were closed for public holidays.
5. Oil drops on supply glut worries, rig count ahead
Oil prices fell on Friday on worries that U.S. rig counts would continue to rise and that returning Libyan and Nigerian exports would stoke a global supply glut.
Baker Hughes U.S. rig count data for the week to Sept. 16 is due later on Friday. Last week, the oil services firm reported that U.S. drillers added oil rigs for a tenth straight week.
U.S. crude oil futures fell 1.28% to $43.35 at 5:52AM ET (9:52AM GMT), while Brent oil traded down 1.40% to $45.94.