Markets Steady Ahead of Fed While Retail Sales Surprise to Upside

• Markets opened the week cautiously, with traders holding back ahead of the FOMC decision due early tomorrow morning. It remains the focal point of the week and is expected to guide near-term direction.
• A 25bp cut is fully priced, but the real focus will be on the statement and press conference, as investors look for signals on how aggressive the Fed may be with its easing cycle.
• US retail sales beat expectations in August, rising 0.6% versus +0.2% forecast, showing household spending still has momentum despite weaker confidence readings.
• The stronger print pushed Treasuries lower, with the 2yr yield down 3bp to 3.50%, while the 10yr held near 4.03%.
• At home, RBA Assistant Governor Sarah Hunter struck an upbeat tone, noting the Bank is “pretty close” to meeting its inflation and employment goals. She added the economy is near full employment and households are past the worst of the cost-of-living squeeze.