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Less Hawkish Fed Going Forward


The Federal Open Market Committee yesterday kept its fed funds rate unchanged at a 22-year high of 5.25% – 5.50% for a second meeting, while leaving open the possibility of another increase as soon as December.

Stock index futures are higher today as Treasury yields declined overnight.

Jobless claims in the week ended October 28 were 217,000 when 213,000 were expected.

Third quarter nonfarm productivity on an annualized basis increased 4.7% when 4.2% was anticipated, and unit labor costs declined 0.8% when an increase of up 0.7% was predicted.

The 9:00 September factory orders report is estimated to show a 1.1% increase.


The U.S. dollar is sharply lower due to falling Treasury yields overnight.

The euro zone October manufacturing PMI was 43.1 when 43.0 was anticipated and is down from  43.4 in September.

German unemployment increased more than expected in October. The number of people out of work increased 30,000 in seasonally adjusted terms to 2.678 million. Analysts expected the total to increase 15,000.

The Bank of England announced it left its policy rate unchanged at 15-year high of 5.25% at its policy meeting today. The central bank said policy will stay tight for an extended period.

Japanese Prime Minister Fumio Kishida and his cabinet approved a larger-than-expected economic stimulus package that is designed to boost growth and help households hurt by inflation.

Australia’s trade surplus narrowed to an over two-year low in September.


Kathleen O’Neill Paese of the Federal Reserve will speak at 5:30.

Financial futures markets are now predicting there is an 85% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its December 13 policy meeting, and there is a 15% probability of a 25 basis point increase.

In early October the probability of a 25 basis point increase in the fed funds rate at the December policy meeting was as high as 46%.


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Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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