Central Banks Soon Less Hawkish?

INTEREST RATE MARKET FUTURES

Futures are higher across the yield curve due to ideas that central banks around the world, including the Federal Reserve, could soon slow the pace of monetary policy tightening.

Federal Reserve speakers today are John Williams at 8:00, Lorie Logan at 8:00, Loretta Mester at 8:15, Phillip Jefferson at 10:45 and Mary Daly at 12:00.

According to financial futures markets, there is a 38.0% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 62.0% probability that the rate will increase by 75 basis points at the November 2 policy meeting.

Last week the probability of a 75 basis point hike in the fed funds rate was as high as 69%.

STOCK INDEX FUTURES

Stock index futures are higher due to growing pressure on the Federal Reserve to be less hawkish.

Prices are higher despite ongoing worries of a global economic downturn.

The 9:00 August factory orders report is expected to show a 0.2% increase.

The 9:00 August Job Openings and Labor Turnover Survey (JOLTS) report is anticipated to be 11.150 million.

CURRENCY FUTURES

The U.S. dollar index is lower on the belief that the Federal Reserve may soon tone down its hawkish rhetoric.

The euro currency is higher on news that producer price inflation in the euro area hit a new record high of 43.3% year-on-year in August 2022, which is up from a revised 38.0% in July and slightly above market expectations of 43.1%.

The core consumer price index for the Ku-area of Tokyo in Japan increased 2.8% to 102.7 points in September 2022 from a year earlier, accelerating at the fastest pace since 2014. Tokyo’s core inflation rate matched a consensus forecast and followed a 2.6% gain in August.

The Australian dollar is lower after the Reserve Bank of Australia raised the cash rate by 25 basis points to 2.6%, defying market estimates of a 50 basis point hike.

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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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