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Pre-Market Primer: Markets Look Up Ahead of Fed Announcement as Housing Starts Disappoint

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Will the Fed extend Operation Twist?

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MINYANVILLE ORIGINAL Markets are turning higher on hopes that the Fed will take action in its policy meeting today while Greek pro-bailout parties put their differences aside to form a coalition government.

Antonis Samaras of New Democracy and Evangelos Venizelos of PASOK are still in talks to form a government with anti-austerity parties taking a minority of seats in the parliament. The two parties are traditionally rivals.

Spanish banks, before getting an international bailout, were supposed to have finished audits to determine exactly how much they will need by this week. Today, the Spanish central bank announced that it will have to delay the final audits until September. This could be a sign that the initial estimate was not big enough.

Spain's 18-month borrowing costs jumped to 5.1% at an auction today, up from 3.3% at the last comparable auction. 10-year yields approached yesterday's highs and drifted down to 7.05%. Meanwhile, Denmark sold 1.6 billion krone of two-year bonds with a yield of -0.08%.

At the G20 meeting in Los Cabos, emerging economies raised their contributions to the IMF's firewall to help keep Europe's debt crisis contained to $456 billion from $430 billion. China committed another $43 billion in lending to the IMF. Mexico, Russia, India, and Brazil all contributed an extra $10 billion.

Asian markets slumped today, while US futures and European indices are in positive territory. Dow (^DJI) futures rose 0.22% to 12,714.00. S&P 500 (SPY) futures gained 0.25% to 1,344.30 and Nasdaq (^IXIC) futures are up 0.42% to 2,598.25.

US housing starts fell to a rate of 708,000, missing expectations that builders would break ground on more homes.

The Fed's Open Markets Committee will meet until tomorrow afternoon, after which meeting minutes will be released and Chairman Ben Bernanke will hold a press conference. A string of poor economic announcements leads many analysts to believe that Operation Twist is going to be extended

JPMorgan Chase (JPM) CEO Jamie Dimon will testify before Congress again today, this time before the House Financial Services Committee.

FedEx (FDX), an economic bellwether company, forecasts lower-than-expected earnings for the three months ending in August. Shares are down 2% in the pre-market.

Microsoft (MSFT) unveiled its answer to the iPad: a tablet called the Surface. Availability dates and pricing has yet to be announced. The Surface will feature a 10.6 inch touch screen, keyboard, trackpad, kickstand, and stylus.

Oracle (ORCL) earnings rose 8% in the company's fourth fiscal quarter, beating expectations.

Twitter: @vincent_trivett
No positions in stocks mentioned.
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