U.S. Stocks Gain With Dollar as Gold Rally Stalls, Oil Advances

BY: Bloomberg Business - Jeremy Herron - November 16, 2015

The impact from the Paris attacks on global financial markets faded, with investors refocusing attention on the prospects for growth worldwide as the Federal Reserve considers raising interest rates.

The Standard & Poor’s 500 Index halted a three-day slide that capped its worst week since August, while European equities shrugged off declines to close higher as France expanded an aerial bombardment in Syria. An advance in gold stalled near $1,083 an ounce, while the euro weakened toward a six-month low versus the dollar. Treasuries rose with French and German bonds.

“We may not be seeing as much of a negative reaction as we could have if the tragedy occurred two weeks ago when the market was up within one percent of the highs,” said Frank Cappelleri, a market technician at Instinet LLC in New York. “Not to say that we wont get downside going forward but today at least, knowing where the market has come from, it’s helped it at least to be stable.”

The history of terror incidents around the world over the last 15 years shows market reactions are often sharp and, increasingly, short-lived. European shares initially retreated before erasing the loss in trading about one-fifth below the 30-day average. While gold climbed for the first time in five days, its gains faded as shares reversed.

Global equities fell last week by the most in two months, on speculation an October rally had gone too far, too fast amid renewed signs that economies from China to Europe were slowing. The rebound Monday was led by commodities producers that beaten down last week. Two-year Treasury notes halted an advance from last week as futures traders bet the Federal Reserve remains on track to boost rates as soon as next month.


Stocks

The S&P 500 rose 1 percent at 2 p.m. in New York, poised to halt a three-day slide that capped the gauge’s worst week since August. The S&P 500 had fallen in seven of the previous eight sessions after Fed Chair Janet Yellen said policy makers’ December meeting was a “live possibility” for a rate increase.

Shares of commodities and consumer-staples producers led gains Monday, while financial firms slipped with discretionary-product makers.

“This is going to be a market driven by U.S. economic data,” Stephen Wood, who helps manage $265 billion as chief market strategist for North America at Russell Investments in New York, said by phone. “I think the market is still keeping it’s gaze on a December Fed decision.”

The Stoxx Europe 600 Index rose 0.3 percent and the CAC 40 Index of French erased losses of more than 1 percent. Total SA and BP Plc all climbed more than 1 percent, sending the Stoxx 600 Oil & Gas Index higher for the first time in four days. Travel shares fell the most in Europe, with Accor SA down 4.2 percent and Air France-KLM Group losing 5.8 percent.

While France dispatched warplanes to bomb Islamic State’s Syrian nerve center after assailants killed at least 129 people on Friday, the history of terror incidents over the past 15 years shows market reactions can be sharp and short-lived.

“Terrible as these events are on a human level, from a market perspective the impact tends to be transitory,” said Richard McGuire, head of rates strategy at Rabobank International in London.

Private Money Lenders continue offering a great opportunity to buy or refinance before the rates go up in December.

Currencies

The euro approached a six-month low versus the dollar on concern the terror attacks will slow expansion in Europe’s economy. The euro slipped 0.8 percent to $1.0687, the lowest since April. The yen weakened 0.5 percent to 123.23 to the dollar.

U.S. inflation data are scheduled to be released Tuesday. The Fed will publish minutes from its October meeting on Nov. 18.

Bonds

U.S. Treasury two-year notes ended a four-day gain amid speculation the terror attacks won’t prevent the Fed from raising interest rates next month. The yield rose less than one basis point to 0.83 percent, while the 10-year note yield was little changed at 2.26 percent.

Futures show a 64 percent chance the Federal Open Market Committee will announce a rate increase when it meets in December, even after the attacks in Paris, which followed suicide bombs in Beirut that killed at least 43 people.

U.S. corporate debt fell for a second straight week, losing 0.028 percent , according to Bank of America Merrill Lynch Index. The losses were led by the riskiest debt with the difference in yield between investment-grade bonds and junk debt rising to the highest levels in more than a month.

French and German government bonds were little changed after five days of gains. The French 10-year yield was at 0.87 percent, while the yield on similar-maturity German bunds at 0.54 percent. Yields on Belgian, French and German two-year notes fell to the most negative on record.

Emerging Markets

Emerging-market assets bore the brunt of the shift away from risk assets in the wake of Europe’s worst terror attack in more than a decade. The MSCI Emerging Markets Index decreased 0.9 percent to a six-week low. Benchmarks in Hong Kong, South Korea and the Philippines led losses.

A gauge tracking 20 developing-nation currencies fell toward a record, as the attacks compounded concerns over deteriorating economic growth and looming U.S. interest-rate increases. South Korea’s won weakened 0.9 percent and Turkey’s lira declined 0.7 percent.

How financing affects the entire real estate market – by Maria Hopkins

BY: New England Real Estate Journal - November 13th, 2015

I think many people have underestimated the influence that financing has on the real estate market.

 

Although most people can see how lower rates can lead to higher overall real estate values, the availability of financing or lack of availability is huge.

 

Always have in mind different financing opportunities for example there is Private Money Lenders that are a great tool to move those complicated clients that just don't qualify with conventional lenders.

 

One of the factors that continues to fuel the market vs. the existence of all kinds of financing programs. VA financing is at an all time high with so many veterans now wanting to buy or refinance and with a VA loan they can borrow 100% and they are so deserving of this benefit. The property itself has to be in pretty good shape or have some repairs done in order to close the loan but it’s not as hard as some think to sell to a veteran. The process has actually less risk of having problems than many of the other financing programs. The recent changes to FHA rules for appraisals after September 14, 2015 has really made that type of financing the most difficult. (This includes USDA loans.)  The appraisers now have to inspect a property in great detail like a home inspector and require more repairs to be done. They are liable for ensuring that the condition of the property meets certain standards but because they are not home inspectors or licensed contractors, they are forced to require these professionals to inspect the property and then rely on them partially for the decisions about repairs they will have to require. The appraisal fees therefore have increased for the time and liability. The lenders that can do what they call streamline 203K loans are the best lenders to finance FHA, because they can just switch to this kind of loan if necessary to finance the required repairs.

It is amazing that rates are still so good, yet people think they should wait to buy. For those that still can, this is the greatest time to buy anything. The rates may go up next year which may affect the market. Those of you who are still thinking about it—WHAT ARE YOU WAITING FOR?  There are amazing real estate deals out there. Yes—it is time consuming to go looking for them but the payoff can be great.

 

And for those of you who think they are going to buy and “flip”—be very careful. Many are overpaying for these properties. The costs to renovate are always higher than you think. You must make allowances for those hidden costs. Carrying costs are increasing. You have to figure in the cost of the mortgage for 3, 6 maybe 9 months sometimes, while you are waiting to sell. Better yet –underprice it from the beginning.

 

The biggest problem that I see is that the real estate agents are not as educated as they need to be to give proper guidance to their sellers and buyers. They do not know enough about financing and how it can affect the real estate transaction. When I give a seminar on the topic, we get maybe 40 people who show up when there should be hundreds. If a deal falls apart because of financing issues, usually there are things that should have been known and dealt with at the negotiating stage and the Realtors just weren’t educated enough to know. During the deal is not the time to learn. Sellers and buyers deserve better. I was a realtor before I was an appraiser and I still am. I just don’t sell anymore unless it involves my own family. So I know how hard real estate agents work, sometimes with no closing at the end. Many things can happen causing a real estate transaction to fall apart. Financing has never been as complicated as it is today and real estate agents, in my opinion, have never been so uneducated. Don’t get me wrong. They try to be, but they don’t even know what they don’t know. The education is not even available fast enough to keep up with the changes.

 

So we are all learning how financing can create or destroy wealth. It is an integral part of real estate value. And one way or another, history always repeats itself in the real estate market.

 

Maria Hopkins, SRA, RA, is president of Maria Hopkins Associates, Spencer, Mass.

Mortgage Rates Set to Rise, Adding Frenzy to Real Estate Market

By: Mainstreet.com - Brian O'Connell  - Nov 10, 2015 5:11 PM EST

A highly positive October jobs report, with 271,000 new jobs created, shows the U.S. economy picking up speed, and that can mean good or bad news for the residential real estate market, depending on whether you're a seller or a buyer.

Realtor.com estimates the strong employment report will boost U.S. home sales activity and will also hike U.S. mortgage rates above 4%.

Private Money Lenders are available to help you purchase that home in this increased demand for housing environment. Fast and efficient closings will help you obtain your property before somebody else gets a pre-approval from the Institutional Lenders.

  "We should see continuing strong demand for housing in the months ahead if today's strong jobs report reflects a true return back to a strong growth trend we've seen over the last few years," says Jonathan Smoke, chief economist at Realtor.com. "The healthy strong employment results for the past two years created an uptick in household formation, which has driven increased demand for home purchases and rentals."

"The jobs report will influence the long-term bond market, so mortgage rates will increase in response," he adds. "The average 30-year conforming mortgage rate was 3.99% yesterday, having increased nine basis points in one week due to the consensus view of a strong, but not this strong, employment report. The 30-year conforming rate will likely top 4% as a result of this news."

If the Federal Reserve was waiting for proof of an economic rebound, some experts say the latest jobs number fits the bill.

Robert R. Johnson, CEO of The American College of Financial Services, says the Fed has been looking for strong evidence that the economy is recovering prior to increasing the fed funds target rate, and the jobs number should "push up" the date when the Federal Reserve raises interest rates, likely in December.

"This development is not good news for people looking to take out mortgage debt in the near future," Johnson says. "Once the Fed starts raising rates, interest rates throughout the economy, including mortgage rates, auto loan rates and other loan rates will trend upward. I believe that anyone thinking about refinancing a mortgage or buying a home and taking out an initial mortgage should not wait, as rates will rise."

Like Smoke, Johnson also believes the jobs number will boost home sales. "Many potential homebuyers may see an opportunity to buy a home and take advantage of current low mortgage rates," he adds.

There is some history on the link between a stronger jobs climate and higher mortgage rates. "In 2004, when the Fed increased interest rates for the first time in four years, it caused the booming real estate market to get more manic," says John Wake, the so-called geek-in-chief at Real Estate Decoded and a realtor with HomeSmart in Scottsdale, Ariz. "Many people expected the increase to be the first of many so they became even were more desperate to buy a house right away."

 

Wake says they were right, as the Federal Funds Rate increased from 1% in the summer of 2004 to 5% in the summer of 2006. "Sure, in the long run higher rates hurt the demand for homes, but in the short and medium run they can stoke demand," he says. "It all depends on what people think an interest rate increase today means for interest rates tomorrow."

Right now, some real estate insiders say higher mortgage rates are on the way, with the booming October jobs number insuring that day comes sooner than people might think.

Asian Markets Rebound After Wall Street Rally

By: NASDAQ - RTT News,  November 02, 2015, 09:56:00 PM EDT
(RTTNews.com) - Asian stock markets are higher on Tuesday following the overnight rally on Wall Street as well as the positive cues from European markets. The markets in Japan are closed for the Culture Day holiday.

The Australian market advanced in a broad-based rally, following the positive cues overnight from Wall Street as well as European markets and ahead of the Reserve Bank of Australia's monetary policy decision later in the day. The RBA is widely expected to keep its benchmark lending rate on hold at 2.00 percent.

 

In late-morning trades, the benchmark S&P/ASX200 Index is adding 63.00 points or 1.22 percent to 5,228.80, off a high of 5,246.40 earlier. The broader All Ordinaries Index is up 59.50 points or 1.14 percent to 5280.80.

In the mining sector, BHP Billiton (BHP) is adding 1.6 percent, Rio Tinto (RIO) is higher by 1.2 percent and Fortescue Metals is gaining 1.7 percent.

Meanwhile, gold miner Newcrest Mining is down 0.4 percent and Evolution Mining is lower by almost 1 percent after gold prices fell to four-week lows overnight.

Among oil stocks, Santos is gaining more than 3 percent, Woodside Petroleum is adding 1.5 percent and Oil Search is up 0.5 percent.

In the banking space, ANZ Banking, National Australia Bank, Commonwealth Bank and Westpac (WBK) are higher in a range of 1.2 percent to 1.5 percent.

Graincorp said it expects a fall in full-year profit amid challenging conditions in global grain markets and lower grain production in eastern Australia. Shares of the grain handler are down 0.6 percent.
Construction giant CIMIC's Leighton Contractors unit has secured a contract from BG Group'sQueensland Gas Company for setting up gas infrastructure in Queensland's Surat basin. Shares of Leighton are higher by 1.7 percent.

Port and rail operator Asciano's board has reiterated its support for Canadian giant Brookfield Infrastructure'sA$8.9 billion takeover bid for the company after logistics company Qube Holdings last week acquired an almost 20 percent stake in Asciano to block the Brookfield bid. Shares of Asciano are advancing almost 1 percent.

In the currency market, the Australian dollar has edged lower against the U.S. dollar on Tuesday, ahead of the RBA's interest rate decision. In early trades, the local unit was trading at US$0.7136, down from US$0.7140 on Monday.

Elsewhere in Asia, Hong Kong, Singapore, Indonesia and Taiwan are higher by more than 1 percent each. Shanghai, South Korea, Malaysia and New Zealand are up with modest gains.

On Wall Street, stocks closed sharply higher on Monday, partly reflecting a positive reaction to news on the merger-and-acquisition front, which suggests companies are optimistic. Traders were also reacting to the latest U.S. economic news, including a report from the Institute for Supply Management showing a slight expansion in manufacturing activity in the month of October.

The Dow climbed 165.22 points or 0.9 percent to 17,826.6, the Nasdaq soared 73.40 points or 1.5 percent to 5,127.15 and the S&P 500 jumped 24.69 points or 1.2 percent to 2,104.05.
The major European markets also ended Monday in positive territory. While the U.K.'s FTSE 100 Index closed just above the unchanged line, the French CAC 40 Index rose 0.4 percent and the German DAX Index advanced by 0.9 percent.

Crude oil prices fell Monday, holding in a stubborn trading range amid global demand worries. WTI oil futures for December delivery fell 45 cents, or 1 percent, to settle at $46.14 a barrel.

Private Money Lenders continue earning higher interest rates. Borrowers are enjoying the opportunities these lenders offer in times when the Institutional Lenders are busy managing new TRID regulations.

Federal Reserve expected to hold interest rate at zero

BY: Economics Times AFP | 27 Oct, 2015, 09.01AM IST

WASHINGTON: The Federal Reserve is expected to again delay raising interest rates when it begins a two-day policy meeting on Tuesday amid more signs of lethargy in the world economy.

With central banks in China and Europe headed in the direction of more easing and deflationary pressures all around, many economists and the debt markets are now betting that the first rate increase in more than nine years will not happen until next year.

That will buy some more time for emerging market countries and their businesses to prepare better for a long-expected and challenging tightening of US monetary policy.

But the turbulence in capital and currency markets that has accompanied the Fed's slow shift toward the increase will then likely continue, equally vexatiously.

Private Money Lenders are taking advantage of the volatile US market and are investing in the real estate loans patiently awaiting for the Federal Reserve to make its next move.

After the last Fed meeting in mid-September, Chair Janet Yellen said that the policymakers of the Federal Open Market Committee were looking for a bit more confirmation of US economic strength amid the global slowdown.

She also forecast a federal funds rate rise from the current floor of 0-0.25 percent before the end of the year.

But since then, US exports and inflation have looked weaker, more doubts have arisen over China's ability to beat back a sharp downturn and the powerful US job creation machine of the past two years has ratcheted back into first gear.

Underscoring the impact of this shift, in an uncommon public split, two members of the five-person Fed board of governors publicly declared themselves in favor of waiting since Yellen last spoke in September.

"The chances of a rate hike announcement at October's FOMC meeting are slim to none," said Kim Fraser of BBVA bank.

Fraser says the meeting takes place as third quarter growth appears likely to be much lower than the hot 3.9 percent pace of the second quarter.

"Throughout the past few months, the US economy has been hit hard by weakness abroad, with many export-oriented industries reporting a significant drop in production," she said.

Analysts said they expect the FOMC to "mark down" its assessment of the economy in its policy statement, after displaying consistent confidence since the beginning of the year.

It is not where Yellen, now in her second year at the head of the Fed, expected to be.

A year ago, FOMC members were confident enough in US growth that, on average, they were predicting the Fed funds rate would be at 1.25 percent by the end of 2015.

With the rate having sat at zero since 2008 to shore up growth, the FOMC is anxious to move away from the extreme easy-money stance, which is fueling unneeded asset speculation and which has limits to its utility.

The Fed wants, however, the jobs market to tighten -- with clear signs, yet unseen, of rising wages -- and for inflation to pick up toward 2.0 percent, when it has generally weakened.

After the people's Bank of China last week lowered its rate and the European Central Bank hinted at the possibility of more easing in December, the Fed is further boxed in: a rate increase now would strengthen the dollar more, hurting US export industries and likely overall industrial output. 

"The FOMC cited the strong dollar as a drag on net exports in the minutes to their September meeting, and also pointed out that the strong dollar holds down US inflation," said economist William Adams at PNC Bank. 

According to CME Group data, two thirds of futures contract traders do not expect any movement in the rate before next year, with a majority expecting it only in March.

Some like the economists at Macroeconomic Advisors, predict a hike in December. But subsequent increases will come "at a slower pace than previously thought," given global weakness, they said.

 

 

 

 

With foreclosure and REO inventory shrinking, firms must seek new ways to eliminate costs.

By DS NEWS - Shannon Cobb - October 2015 issue of DS News magazine.

The rebound of the mortgage and housing market is good news for all including Private Money Lenders except those who work in the counter-cyclical segments, such as foreclosure and REO services. What was a boom period in the late 2000s has now dwindled along with the national foreclosure industry. Adding to the anxiety of most businesses is an increased regulatory scrutiny being placed on many in the industry, especially servicers.

As REO-related firms look ahead to the near future, they realize that order volume will be dramatically reduced. They will be battling for market share. They will also need to find new ways to contain costs, which are only rising as regulatory-driven requirements multiply. Some actions will be obvious to any business owner, but difficult to execute. Others might not be so readily apparent. Either way, it is never a bad idea to review expenditures and the systems, policies and procedures which spawn them, asking “where is my operation inefficient?”

New Technology?
About the last thing most business owners wish to do when markets recede is invest money into infrastructure—especially technology. It seems counter-intuitive to spend money when there’s less to spend. However, the long term perspective must win out in these cases. If the technology in question is outdated, the replacement cost savings in the not-too-distant future will easily outpace the near term expenses. New compliance requirements will likely mandate the implementation of new technology solutions to some degree (e.g. TRID’s impact on loan origination systems, vendor management systems and title production technology). Technology, used correctly, is an excellent way to leverage the resources in place more efficiently. It can eliminate redundancies and tasks previously done by personnel manually and increase available space in the facility. Used properly, it can save time and increase productivity. Unless your firm is facing extremely bad circumstances, consider this as the time to shore up your systems before the next market upswing arrives.

Make Better use of Human Resources
It is an unfortunately reality in our world that the most expensive asset a company can have is its personnel. Although it’s never easy, downsizing staff is generally one of the first orders of business as markets shrink. However, now is also a good time to add an element of versatility to your team. It is a good time to train specialists in multiple tasks and introduce them to other elements of the business. Although it is an investment in the short term, it can lead to increases in productivity as well as sowing the seeds for future managers (who generally are more effective when they have a broader understanding of the operation). It will also save on training expenses and time should there be a need to further trim staff in the future.
Ours is an industry that, for decades, has been willing to outsource some services, but not others. A firm that outsources its tax, accounting and IT functions, for example, might balk at using title search products or vendor management providers. However, it’s highly likely that some of the firm’s highest expenditures (whether as a function of time or cost) can be outsourced with no loss of quality.  Although many outsourcing providers, at one time, tended to cut quality for the sake of speed and cost, that is no longer the case. Any business process outsourcing firm or outsourced product producer won’t be in business long if the services or products rendered fail to meet higher standards.
An inaccurate or poorly composed element of the larger real estate transaction can have surprisingly major repercussions, and may be an indicator that the firm providing the product or service has produced subpar results on a larger, systemic level. The secondary market, government enforcement agencies, and clients won’t tolerate the risk associated with poor products or services. Thus, the outsourcing industry is involved. As is the case with using any vendor, of course, decision makers should be sure to kick the tires on any potential partners, including but not limited to sending them sample orders and visiting their facilities if at all possible. Due diligence should also be performed by collecting formal references from the potential vendor and informally soliciting the opinion of all network connections about their experiences with the vendor. Engaging the right vendor after a sufficient vetting process could be the difference between profit and loss in a down market.

Cut Operational Costs 
A slowing market also signals that it may be time to examine the entire operation, top to bottom, for needless or redundant costs. One major expense to any firm is the brick-and-mortar operation and its related expenses. Unless your function absolutely depends on having a physical presence, how many offices are needed need to manage the existing clientele and, perhaps, add some scalability through centralization of tasks? Centralizing standardized tasks is a way to reduce cost because it eliminates redundant staff and tasks within the organization and gives flexible capacity abilities when the need to reduce or add scale comes into play. Closing an office need not be the only recourse. Can you reduce the amount of space you are leasing in a particular building? Is the commercial market such that there is some leverage to renegotiate? Many firms open new branches when order counts rise. However, it’s much more difficult to shutter those same sites when the market dips. Nonetheless, it may have to happen.
Location isn’t just important for those seeking to buy or sell a home. The location of the office can have an impact on costs. It may be time to trade an office in a trendy urban location for a suburban home if the difference in taxes, utilities and space is significant. It’s easy to be sentimental when it comes to a business that has been in a certain office for a long time. But that sentimentality may be harming the actual business in the form of unwarranted costs.
Even the layout of an office or offices can have an impact on costs. Is the workspace laid out efficiently to allow staff to capitalize on all of the resources available to them? For example, if the firm still utilizes copiers and scanners, are the personnel who use them located nearby? Are the resources the team needs to complete its tasks readily available to them? Is the office setting relatively pleasant environment? Lean staffs tend to have lower morale, leading to lower productivity. Responsible executives must do everything possible to ensure that the workplace is a setting conducive to a positive outlook from employees. The operation ultimately depends on the performance of the team.

Manage Risk
The threat of being audited and/or fined or losing a client because of a failure to comply with regulatory and client requirements is today higher than ever before. More lenders are doing more onsite audits to ensure NPI (Non-Public Information) is thoroughly protected. More state regulators are paying greater attention to our industry. If compliance and security is not a priority for the organization, now is the time. Business will be more difficult to gain in a down market. The success of the organization should not be impeded because of an in ability or unwillingness to acclimate itself to the new reality. Client and consumer communication regarding, encryption, the storage of sensitive data (limited server access ), and even which desks are near first floor windows (clean desk policy) are potential points of risk to the business if a cohesive strategy has not been implemented.
Risk doesn’t rest upon internal operations alone. Partners and vendors should be audited regularly with several contingencies considered. Are they protecting client NPI? How do they monitor the quality of their products or services? How does their compliance policy work? In a day and age where a mortgage lender is liable for the actions of its service providers, that lender will want to know how closely vendors down the line are being monitored. Now is the time to implement a successful vendor audit program. The potential financial consequences will seem doubly harsh in a down market.

Trimming outlays in a down market is certainly no revolutionary concept. But it is something few enjoy doing. It’s always more enjoyable to simply increase sales efforts in thriving markets to cover one’s expenses. However, with foreclosed and REO inventory sinking quickly, it will be the businesses willing to answer the hard questions and make the difficult moves which maintain acceptable profit levels.

Shannon Cobb is an EVP with American Tax and Property Reporting. He is responsible for the sales and operations of title search product SmartProp and other planned products in the mortgage lender and real estate information segments. Shannon has over 20 years of experience in the title and settlement services industry.

Federal Reserve expected to hold interest rate at zero

BY: The Economic Times Business - AFP | 27 Oct, 2015, 09.01AM IST

Throughout the past few months, the US economy has been hit hard by weakness abroad, with many export-oriented industries reporting a significant drop in production. Private money lenders are desperately looking for opportunities to invest their money in something with less turbulence than the US economy.

WASHINGTON: The Federal Reserve is expected to again delay raising interest rates when it begins a two-day policy meeting on Tuesday amid more signs of lethargy in the world economy.

With central banks in China and Europe headed in the direction of more easing and deflationary pressures all around, many economists and the debt markets are now betting that the first rate increase in more than nine years will not happen until next year.

That will buy some more time for emerging market countries and their businesses to prepare better for a long-expected and challenging tightening of US monetary policy.

But the turbulence in capital and currency markets that has accompanied the Fed's slow shift toward the increase will then likely continue, equally vexatiously.

After the last Fed meeting in mid-September, Chair Janet Yellen said that the policymakers of the Federal Open Market Committee were looking for a bit more confirmation of US economic strength amid the global slowdown.

She also forecast a federal funds rate rise from the current floor of 0-0.25 percent before the end of the year.

But since then, US exports and inflation have looked weaker, more doubts have arisen over China's ability to beat back a sharp downturn and the powerful US job creation machine of the past two years has ratcheted back into first gear.

Underscoring the impact of this shift, in an uncommon public split, two members of the five-person Fed board of governors publicly declared themselves in favor of waiting since Yellen last spoke in September.

"The chances of a rate hike announcement at October's FOMC meeting are slim to none," said Kim Fraser of BBVA bank.

Fraser says the meeting takes place as third quarter growth appears likely to be much lower than the hot 3.9 percent pace of the second quarter.

"Throughout the past few months, the US economy has been hit hard by weakness abroad, with many export-oriented industries reporting a significant drop in production," she said.

Analysts said they expect the FOMC to "mark down" its assessment of the economy in its policy statement, after displaying consistent confidence since the begin ..

It is not where Yellen, now in her second year at the head of the Fed, expected to be.

A year ago, FOMC members were confident enough in US growth that, on average, they were predicting the Fed funds rate would be at 1.25 percent by the end of 2015.

With the rate having sat at zero since 2008 to shore up growth, the FOMC is anxious to move away from the extreme easy-money stance, which is fueling unneeded asset speculation and which has limits to its utility.

The Fed wants, however, the jobs market to tighten -- with clear signs, yet unseen, of rising wages -- and for inflation to pick up toward 2.0 percent, when it has generally weakened.

After the people's Bank of China last week lowered its rate and the European Central Bank hinted at the possibility of more easing in December, the Fed is further boxed in: a rate increase now would strengthen the dollar more, hurting US export industries and likely overall industrial output.

"The FOMC cited the strong dollar as a drag on net exports in the minutes to their September meeting, and also pointed out that the strong dollar holds down US inflation," said economist William Adams at PNC Bank. 

According to CME Group data, two thirds of futures contract traders do not expect any movement in the rate before next year, with a majority expecting it only in March.

 

Some like the economists at Macroeconomic Advisors, predict a hike in December. But subsequent increases will come "at a slower pace than previously thought," given global weakness, they said.