A Less Hawkish Fed?
STOCK INDEX FUTURES
Stock index futures are higher.
In August U.S. based employers announced 75,151 job cuts, which is a 217% increase from the 23,697 cuts announced in the previous month, according to Challenger, Gray & Christmas, Inc. Also, it is 267% higher than the 20,485 cuts announced in the same month last year.
Jobless claims in the week ended August 26 were 228,000 when 232,000 were expected.
Personal income in July increased 0.2% when a 0.3% gain was anticipated, and personal consumption expenditures were up 0.8% when an increase of 0.6% was predicted.
Major downtrend lines have been taken out to the upside this week as the fundamentals have improved recently in the form of expectations of a less hawkish Federal Reserve.
The U.S. dollar index is higher.
Interest rate differential expectations remain favorable for the greenback, especially against the European currencies, since the U.S. economy appears to be holding up relatively well compared to economies in Europe.
Higher prices are likely for the U.S. dollar.
The annual inflation rate in the euro area remained unchanged at 5.3% in August 2023. However, the core rate, which excludes volatile items such as energy and food, fell to 5.3% from July’s 5.5%.
The euro area seasonally adjusted unemployment rate remained at a record low of 6.4% in July 2023, matching market forecasts.
German unemployment increased more than expected in August. The Federal Labour Office said the number of people out of work increased 18,000 in seasonally adjusted terms to 2.63 million. Analysts expected an increase of 10,000. The seasonally adjusted jobless rate in Germany remained stable at 5.7%.
The Bank of England’s chief economist indicated U.K. interest rates may not have to increase much more to contain inflation that he said remains too high.
INTEREST RATE MARKET FUTURES
Futures are mixed to higher.
Atlanta Federal Reserve Bank President Raphael Bostic today made his case against any further U.S. interest rate hikes, saying monetary policy is already tight enough to bring inflation back down to 2.0% over a “reasonable” period.
Susan Collins of the Federal Reserve will speak at 8:00 this morning.
Financial futures markets are now predicting there is an 88% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is a 12% probability of a 25 basis point increase.
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