Looking Beyond FOMC

This is an event filled week, with the much anticipated BOJ and FOMC meetings, both on Wednesday.  Most of the recent volatility has been due to central bank disappointment, with the market going into a mini temper tantrum when it doesn't get that QE extension, or more asset buying, or even more dovish talk.  The expectations are now very high for monetary stimulus, so even just staying pat, like the ECB did causes bonds and stocks to selloff.

With all the mediocre to weak economic data we've received, I would give the odds of a September rate hike at about 1%.  I won't go to 0% because you never know if Janet Yellen had a bad meal and suddenly had a change of character.  So that leaves it to what she says, and like usual, it should be a bunch of noncommittal jibberish, avoiding mentions of the presidential election, even though it is the BIGGEST thing on their mind.   Of course, they don't want to sound political, even though they are.

We've got a gap up today, even though you had some bombs planted in NY and NJ.  The market doesn't care about terrorist attacks unless you get something really big, and what happened over the weekend was not that.  We are still stuck in that 2120 to 2160 range, and I don't expect us to break out of this range this week.  There seems to be some anticipatory buying on the Fed meeting coming up.  I see very limited upside till we get a better bottom below 2100.  Thinking that happens sometime in early October.  With Trump doing a lot better in the polls, the election uncertainty is rising as we get closer.  October should be interesting.