BetOnMarkets Afternoon Update

Traders are buoyant today as one storm (tropical) looks as though it
will miss vital US oil rigs and another storm (economic) might just pass
without reaping total destruction on the global financial system.
European markets led the way today and there has been some welcome
follow on buying from US indices. Banks are amongst the top performers
today with RBS, Barclays and HSBC pushing to their highest levels since
June. Better than expected numbers from scandal hit Societe Generale and
a Government cash injection for Northern Rock have helped push the
sector higher.

Elsewhere, the US service industries index contracted less than expected
and ISM non manufacturing prices retreated to 80.8 from 84.5. This
coupled with oil slipping below $120 has cheered markets as they signal
that inflation may be abating.

Later this evening we have the all important FOMC interest rate
decision. Futures markets are currently pricing in a 93% chance of a no
change verdict and a 7% chance of quarter point rise. For September's
meeting, the futures markets are pricing in a 66% chance of no change
and 32% chance of a raise, while October's futures markets are implying
a 41% chance of a quarter point hike. So while today's meeting is almost
a forgone conclusion, the outcomes of the next couple of meetings are
not so clear cut. Markets are forward looking animals so the excitement
today will come with traders focusing on the possible outcomes for the
September and October meetings. Although a quarter point rate hike in
the next three months seems likely, any sign of this being less likely
than previously expected, or at least a delay in rate hikes and markets
could push even higher into the close. With oil and commodity prices
receding, this may not be out of the question.

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