Central Banks Likely Less Hawkish in ’23
STOCK INDEX FUTURES
Stock index futures are higher to start the week as hopes grow that the Federal Reserve may dial back its aggressive monetary tightening.
Stock markets around the world have started 2023 on a positive note, driven by indications that inflation is slowing in the U.S. and in Europe.
The 2:00 central time November consumer credit report is expected to show a $25.5 billion increase.
Although the U.S. dollar index is lower today, the longer term outlook for the U.S. dollar is sideways. Interest rate differential expectations, which have been bearish for the U.S. dollar since late September 2022 are now just neutral.
The euro zone unemployment rate stood at 6.5% in November, which is in line with economists’ forecasts. The number of unemployed people was 10.97 million in November, which was broadly unchanged from October.
Industrial production in Germany in November increased 0.2% on the month, partially reversing a 0.4% decline in October. The previous month’s number was revised lower, from an originally reported 0.1% decline.
INTEREST RATE MARKET FUTURES
Futures are higher at the front of the yield curve and lower at the long end of the yield curve.
Raphael Bostic of the Federal Reserve will speak at 10:30.
According to financial futures markets currently, there is a 77.0% probability that the Federal Open Market Committee will increase its fed funds rate by 25 basis points at the February 1 policy meeting and a 23.0% probability that the rate will be hiked by 50 basis points.
Higher prices are likely for futures across the yield curve.
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