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MORNING BID-What's the (dot) plot, Chair Powell?

· 03/17/2021 03:56
MORNING BID-What's the (dot) plot, Chair Powell?

A look at the day ahead from Dhara Ranasinghe.

It's Federal Reserve day and market focus is on the central bank's rate-hike projections for 2023 in the so-called "dot plot."

Some economists expect this to show the Fed now expects one rate hike for 2023 versus none in December. An unchanged median dot for 2023 could be interpreted as the Fed pushing back against higher bond yields and markets' pricing of rate hikes.

The Fed will deliver its statement and economic forecasts at 1800 GMT, followed with a news briefing. Until then, barring unforeseen events, markets will likely stay calm. Ten-year U.S. yields are just off 13-month highs US10YT=RR, the dollar index =USD is little changed and equity futures are a touch lower ESc1, NQc1.

The tone across world stocks is cautious too, with Asian stocks tracking Wall Street's Tuesday fall and European markets too set to open softer STXEc1.

In the euro zone, it's the final day of voting in the Dutch national election -- the first major general election in the EU since the pandemic began.

Prime Minister Mark Rutte's VVD Party is expected to secure a fourth term, but there is a risk markets are not adequately pricing gains at the ballot for anti-establishment forces.

Some good news for AstraZeneca AZN.L as Australia's pharmaceutical regulator said the rollout of the company's COVID-19 vaccine would continue, despite many European nations pausing vaccinations to investigate reported side-effects.

The EU regulator will release findings on Thursday.

Elsewhere, Credit Agricole Italia CAGR.PA has secured a green light from European Central Bank supervisors for its planned takeover bid of third-tier Italian lender Credito Valtellinese PCVI.MI nL8N2LF1FK.

Key developments that should provide more direction to markets on Wednesday:

- Fed monetary policy decision and news conference.

- German, UK German new car registration data.

- US housing starts data due.

- Corporates: BMW said it expects a significant year-on-year increase in pretax profit; Raiffeisen Bank aims to distribute 20%-50% of consolidated net profits; retail investment platform Hargreaves Lansdown 2021 profit to beat expectations.

- Italy's biggest insurer Generali GASI.MI is studying an acquisition in Russia worth nearly 2 billion euros ($2.4 billion), according to a media report. nL8N2LF0Y5

Federal Open Market Committee Projectionshttps://tmsnrt.rs/3eJVKCI

(Reporting by Dhara Ranasinghe; Editing by Sujata Rao)

((Dhara.Ranasinghe@thomsonreuters.com; +442075422684;))