UPDATE: How much longer this stock-market bull lasts may depend on Fed's next move
By Mark DeCambre, MarketWatch
All eyes on Yellen as the stock market awaits Fed's policy update
Wall Street investors have shrugged off recent worries to propel stocks to fresh all-time highs, but this week's meeting of Federal Reserve policy makers might provide investors the clearest sign yet about the health of the U.S. economy and how the central bank is construing stubbornly low inflation.
The Fed gathering set to conclude Wednesday comes against the backdrop of a host of recent events that market participants are anticipating will factor in policy maker's decision making: The economic impact of Hurricanes Irma (http://www.marketwatch.com/story/harvey-irma-could-ding-us-economy-for-combined-290-billion-2017-09-10) and Harvey, (http://www.marketwatch.com/story/why-oil-prices-are-sinking-as-gasoline-soars-after-harvey-2017-08-28) sluggish inflation, the outlook for fiscal stimulus out of Washington, may be a just a few of the topics that are broached. (That is not even to mention the incalculable risks out of the Korean Peninsula).
Read: Why Harvey and Irma won't change the Fed's rate-raising timeline (http://www.marketwatch.com/story/why-harvey-and-irma-wont-change-the-feds-rate-raising-timeline-2017-09-13)
Although Janet Yellen's Fed isn't expected to make any change to interest rates, it is anticipated that it will lay the groundwork for unwinding its $4.5 trillion balance sheet, if not announce its start. The coming asset-portfolio reduction has been an important focus for markets because of the unprecedented nature of unraveling a nearly decadeslong initiative of monetary stimulus, which could further tighten borrowing costs for individuals and corporations.
Also read: Fed's balance-sheet unwind will be moment of truth for financial markets (http://www.marketwatch.com/story/feds-balance-sheet-unwind-will-be-moment-of-truth-for-financial-markets-2017-09-18)
Yellen is likely to emphasize that normalizing the balance sheet is going to be gradual so as to avoid disrupting markets, said Paul Ashworth, chief North American economist for Capital Economics.