Flight to Quality Supports Rates
INTEREST RATE MARKET FUTURES
Futures are higher across the yield curve due to flight to quality buying, with two-year yields falling 13 basis points.
Federal Reserve speakers today are Raphael Bostic at 8:05, Thomas Barkin at 10:45, Esther George at 1:15 and Raphael Bostic at 5:45.
According to financial futures markets, there is a 46.0% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 54.0% 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 68%.
STOCK INDEX FUTURES
Stock index futures are higher due to falling U.S. Treasury yields.
Prices are higher despite ongoing worries of a global economic downturn from aggressive interest rate hikes from central banks.
The 8:45 central time September manufacturing PMI is expected to be 51.4.
The 9:00 September Institute for Supply Management manufacturing index is anticipated to be 52.4 and the 9:00 August construction spending report is predicted to show a 0.1% decline.
The U.S. dollar index advanced in a flight to quality move on news that euro-denominated bonds issued by a large Swiss bank dropped to record lows.
In addition, interest rate differential expectations remain bullish for the greenback long term.
The euro currency is lower on news that the euro zone September manufacturing PMI came in a little weaker than estimated at 48.4 when 48.5 was forecast.
U.K. manufacturing output fell for a third month in a row in September and orders declined for a fourth consecutive month.
The annual inflation rate in Switzerland unexpectedly fell to 3.3% in September 2022, compared with market forecasts and August’s 29-year peak of 3.5%.
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