Hawkish Comments From Fed’s Kashkari

CURRENCY FUTURES

The U.S. dollar is higher today after sharp declines last week. The U.S. dollar index fell to its lowest level yesterday since September 20.

Today’s gains in the greenback are primarily due to hawkish comments from Neel Kashkari of the Federal Reserve.

Much of the morning gains in the U.S. dollar will probably be given back later today.

Industrial producer prices in the euro area declined 12.4% year-on-year in September 2023, following an 11.5% drop in the previous month and compared to the market consensus of a 12.5% decline. This marked the steepest fall in producer prices on record.

Industrial production in Germany contracted 1.4% month-over-month in September 2023, following a downwardly revised 0.1% decline in August and was much worse than predictions of a 0.1% decrease. This also marks the fourth consecutive month of declining industrial production.

The Halifax House Price Index in the U.K. declined 3.2% year-on-year in October 2023, following a revised 4.5% drop in September.

The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.35%, as expected at its policy meeting today, after maintaining it at 4.1% in the previous four meetings.

INTEREST RATE MARKET FUTURES

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

The Treasury will auction three-year notes.

Federal Reserve speakers today are Michael Barr at 8:15, Jeffrey Schmid at 8:50, Christopher Waller at 9:00, John Williams at 11:00 and Lori Logan at 12:30.

Fed Chair Powell is on the calendar to deliver speeches on Wednesday and Thursday.

Financial futures markets are predicting there is a 90% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its December 13 policy meeting, and there is a 10% probability of a 25 basis point increase.

STOCK INDEX FUTURES

Stock index futures were lower after Federal Reserve Bank of Minneapolis President Neel Kashkari said policymakers have yet to win the fight against inflation and that they will consider more tightening if needed. He added he does not currently see a lot of evidence that the economy is weakening.

The 2:00 central time September consumer credit report is expected to show a $10 billion increase.

 

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