December FOMC Minutes Today
INTEREST RATE MARKET FUTURES
Futures are lower as the yield on the U.S. 10-year Treasury note advanced to 3.98%.
The minutes from the December 13 Federal Open Market committee meeting will be released at 1:00.
Federal Reserve officials at their meeting in mid-December held the policy interest rate unchanged in the range of 5.25% to 5.50%, but issued projections showing most officials expect it would need to decline in 2024 by at least three quarters of a percentage point as inflation has steadily declined.
Traders continue to believe the Fed will cut interest rates this year but not at the January meeting.
Financial futures markets are predicting there is an 11% probability that the Federal Open Market Committee will reduce its fed funds rate by 25 points at its January 31, 2024 policy meeting and an 89% probability of no change.
However, financial futures markets are currently suggesting the Federal Open Market Committee will reduce its fed funds rate by 25 basis points at its March 20, 2024 policy meeting.
STOCK INDEX FUTURES
Stock index futures are lower.
Much of the selling today is being linked to the belief that the Federal Reserve may not be quite as aggressively lowering its fed funds rate this year compared to what was thought at the end of last year.
The 9:00 central time December Institute for Supply Management manufacturing index is expected to be 47.2.
The 9:00 November Job Openings and Labor Turnover Survey (JOLTS) is anticipated to show 8.75 million.
The fundamentals and technicals remain supportive to stock index futures longer term despite a potentially less dovish Federal Reserve in 2024.
The U.S. dollar index advanced on ideas that the Federal Reserve may not be as accommodative this year as many analysts had predicted.
However, it still appears that the Federal Reserve will start cutting rates earlier than some of the other major central banks.
Lower prices are likely for the U.S. dollar longer term.
Germany’s seasonally adjusted jobless rate increased to 5.9% in December 2023, as predicted, which is a slight increase from November’s revised 5.8%. This was the highest rate since May 2021.
The U.K. manufacturing sector suffered a setback in December. The final reading of the S&P Global/CIPS manufacturing Purchasing Managers’ Index weakened to 46.2 in December, which ends a run of three months of improvement. The reading was down slightly from a preliminary December estimate of 46.4 and was below the 50.0 growth threshold for the 17th month in a row.
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