A moderating economy in tandem with tighter financial conditions should lay to rest any prospect of a December hike. Nonetheless, Wednesday’s decision was unlikely to see policymakers signal a more dovish stance just yet, say experts.

The Federal Open Market Committee (FOMC) is widely expected to keep the benchmark interest rate within its range of 5.25% -5.50%. With attention focused on the ensuing press conference, several analysts put the likelihood of any material change in the opening statement and language at a minimum.

Bank desks pointed out that the December event comes against a different backdrop from the last two meetings. “The September meeting was during a period of very strong economic data, while the November meeting came amid a mixed slate of data,” Morgan Stanley’s Ellen Zentner noted. “The December meeting, however, comes amid a clearer deterioration in economic data.” (LiveSquawk - Continue Reading) 

An upcoming US stock options expiration that is set to be the largest on record is tamping down market swings, potentially counterbalancing any gyrations stirred by the Federal Reserve's monetary policy announcement on Wednesday.

Some $5 trillion in US stock options are set to expire on Friday, according to Asym500 MRA Institutional, a unit of derivatives strategy and execution firm Macro Risk Advisors. While such events can exacerbate volatility, strategists say this week's expiration is likely to keep stock swings muted and may be one reason equities have traded in a tight range over the last few weeks.

The S&P 500 is up 20.6% this year, following an 12.5% rally from its October lows. More recently, however, market moves have been muted. The benchmark index hasn't logged a greater than 1% move in either direction for 18 sessions, the longest such streak since early August. (MS - Continue Reading) 

China’s central bank is expected to pump more cash into the financial system with policy loans this week, countering tightened liquidity that partly stems from large bond sales.

The People’s Bank of China may inject a net of 325 billion yuan ($45.3 billion) through its medium-term lending facility on Friday, according to the median estimate of 10 analysts surveyed. That would be less than the 600 billion yuan added last month.

The cash support is needed as Beijing rushes to sell 1 trillion yuan of sovereign debt in the last two months of the year to support the faltering economy. While the PBOC is providing more liquidity, it’s expected to keep the one-year policy rate unchanged at 2.5% as the government signalled that it will lean on fiscal measures to counter headwinds facing the world’s second-largest economy. (BBG - Continue Reading)