Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher following higher Asian equity markets.
The 8:45 central time October PMI manufacturing final is expected to be 49.9.
The 9:00 October Institute for Supply Management manufacturing index is anticipated to be 50.
The 9:00 September construction spending report is estimated to be down 0.5%.
The 9:00 September Job Openings and Labor Turnover Survey is predicted to be 9.875 million. The Labor Department’s JOLTS report tracks monthly changes in job openings and offers rates on hiring and quits.
Prospects of a less hawkish Federal Reserve later this year have supported stock index futures in recent weeks.
Also, the technicals are becoming more supportive.
CURRENCY FUTURES
Import prices in Germany increased by 29.8% year-on-year in September of 2022, which is slightly less than market forecasts of 31.0% but remaining not far from August’s record high figure.
The consumer confidence indicator in Switzerland dropped 4.9 points to -46.6 in the fourth quarter of 2022.
In a recent survey a majority of economists said they expect the Bank of England to hike its key interest rate by 75 basis points at its policy meeting on November 3.
The Reserve Bank of Australia raised the cash rate by 25 basis points to 2.85% at today’s policy meeting, matching market forecasts. In addition, the RBA is forecasting inflation to peak around 8.0% later this year.
INTEREST RATE MARKET FUTURES
Today is the first day of the two-day Federal Open Market Committee meeting.
There are no major Federal Reserve speakers scheduled for today.
According to financial futures markets currently, there is an 87.0% probability that the Federal Open Market Committee will increase its fed funds rate by 75 basis points at the November 2 policy meeting and a 13.0% probability that the rate will be hiked by 50 basis points.
It was only a few weeks ago that there was a 98.0% probability of a 75 basis point hike in the fed funds rate and a 2.0% probability of a 100 basis point increase.
Recent moves by other central banks suggest a dovish surprise is possible at the December FOMC policy meeting. The Bank of Canada and Reserve Bank of Australia each increased their benchmark rates by less than economists had expected at their most recent policy meetings. The European Central Bank was also perceived by traders to have been less aggressive.
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