Wall St Week Ahead Frazzled U.S. stock investors eye frothy Treasury market as Fed looms

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Financial markets are bracing for what could be a momentous week, with a Federal Reserve meeting, U.S. employment data and earnings from technology heavyweight Apple Inc (AAPL.O) possibly setting the course for stocks and bonds the rest of the year.

A trader works on the floor at the New York Stock Exchange in New York City, U.S., October 27, 2023. REUTERS/Brendan McDermidNEW YORK, Oct 27 - Financial markets are bracing for what could be a momentous week, with a Federal Reserve meeting, U.S. employment data and earnings from technology heavyweight Apple IncOctober has lived up to its reputation for volatility, as a surge in Treasury yields and geopolitical uncertainty pressured stocks.

Overall, futures markets are pricing in a near-certainty that the Fed does not raise rates in November, and a nearly 80% chance that the central bank holds rates steady in December, according to CME's FedWatch Tool. Still, policymakers have projected they will keep the key policy rate at current levels through most of 2024, longer than markets had previously anticipated.

"It feels like we are at a crossroads whether or not the strong growth we've seen over the summer months will continue over the fourth quarter," and keep worries over inflation and restrictive monetary policy bubbling, said Charlie Ripley, senior investment strategist for Allianz Investment Management.

More broadly, some believe the stock market's trading patterns this year point to a rebound in the fourth quarter.

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