FOMC May Ease More Aggressively

INTEREST RATE MARKET FUTURES

Futures are higher at the front of the yield curve and lower at the long end of the yield curve.

The U.S. Treasury will auction five-year notes today.

Adriana Kugler of the Federal Reserve will speak at 3:00 PM.

Federal Reserve Chair Jerome Powell will speak tomorrow at 8:20 AM.

It is widely expected that the FOMC will reduce its key interest rate again at its November meeting. Currently there is a 42% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its November 7 policy meeting, and there is a 58% chance that the FOMC will reduce its key rate by 50 basis points.

It was just last Wednesday that Federal Reserve Chair Powell in his press conference after the Federal Open Market Committee meeting said the central bank is not in a rush to ease policy and that half-percentage point cuts are not the “new pace.”

STOCK INDEX FUTURES

Stock index futures are holding up well despite yesterday’s release of the September consumer confidence report, which showed the largest one-month drop since August 2021.

Dow Jones futures advanced to new record highs yesterday.

The 9:00 central time August new home sales report is expected to show 700,000.

Stock index futures have recently performed better than the news would suggest, which should be viewed as a sign of strength.

CURRENCY FUTURES

The U.S. dollar index is a little lower.

The Swiss National Bank will hold its policy meeting tomorrow. The market consensus is for a 25 basis-point reduction in its key interest rate from 1.25% to 1.00%.

Australian consumer price inflation slowed to a three-year low in August.

Data from the Australian Bureau of Statistics showed its monthly consumer price index increased at an annual rate of 2.7% in August, which is down from 3.5% in July, and was in line with market forecasts. Core inflation slowed to an annual rate of 3.4% from 3.8%.

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