Hawkish Fed Continues to Dominate


Stock index futures are lower due to a recent shift to a more hawkish on balance Federal Reserve, along with ongoing concerns about the banking industry.

Retail sales in July increased 0.7% when up 0.4% was expected.

The August Empire State manufacturing index was negative 19 when negative 0.4% was anticipated.

Import prices in July increased 0.4% when a gain of 0.2% was predicted, and export prices increased 0.7% when up 0.1% was predicted.

The 9:00 central time August housing market index is estimated to be 56, and the 9:00 June business inventories report is expected to show a 0.2% increase.

Traders are awaiting Wednesday’s release of the minutes from the Federal Reserve’s last policy meeting, in which the central bank resumed its rate-hiking campaign.


The U.S. dollar index is lower.

Germany’s economic outlook improved more than predicted in August.  The ZEW institute’s index of economic sentiment for Germany improved to minus 12.3 in August from minus 14.7 in July.   Economists expected a more moderate improvement to minus 14.4.

However, the ZEW’s separate index for measuring the current economic conditions in Germany declined further in August to minus 71.3 from minus 59.5 in July. Economists anticipated a decline to minus 62.0.

Average wages, excluding bonuses, in the U.K. increased 7.8% year-on-year, which is the most on record and is substantially above forecasts of 7.4%.

The Japanese economy advanced 1.5% quarter-to-quarter in the second quarter of 2023, beating market forecasts of a 0.8% increase.

Today’s release of the Reserve Bank of Australia’s July policy meeting minutes were considered to be dovish, which suggests the Reserve Bank of Australia will keep rates steady for a third straight month in September.


The newest fundamental in recent days is some Federal Reserve officials are once again talking about the need for an additional fed funds rate hike.

Futures are mostly lower with Treasury yields continuing to trend higher.

Despite the recent more hawkish Federal Reserve, most market participants see the Federal Reserve leaving its fed funds rate unchanged when it meets next month.

Financial futures markets are predicting there is an 86% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is a 14% probability of a 25 basis point increase.

While Federal Reserve officials close in on the end of their tightening campaign, the debate is shifting from how high interest rates need to go to how long they should remain at elevated levels.


Interested in more futures markets?  Explore our Market Dashboards here.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now