Heavy Slate of Fed Speakers Today
INTEREST RATE MARKET FUTURES
Market participants will closely monitor comments from Federal Reserve officials this week. Federal Reserve speakers today are John Williams at 7:00, Michelle Bowman at 8:20, Tom Barkin at 9:45 and Neel Kashkari at 4:00.
Federal Reserve Chair Powell will speak before the Economic Club of New York on Thursday.
Recent dovish comments from Federal Reserve officials reduced expectations of another interest rate hike this year.
Financial futures markets are now predicting there is a 90% probability that the Federal Open Market Committee will keep its fed funds rate unchanged and only a 10% probability of a 25 basis point increase at its November 1 policy meeting.
The U.S. dollar was lower in the overnight trade. However, there is some support from the stronger than expected U.S. retail sales report.
In recent days there appears to be only a limited flight-to-quality flow of funds into the greenback.
The ZEW Indicator of Economic Sentiment for Germany improved by 10.3 points from the previous month to hit -1.1 in October 2023, which is significantly stronger than market expectations of -9.3.
Average weekly earnings, including bonuses in the U.K. increased 8.1% year-on-year in the three months to August of 2023, which is the lowest in three months, and below market forecasts of an 8.3% increase.
The hawkish minutes from the recent Reserve Bank of Australia’s policy meeting supported the Australian dollar.
STOCK INDEX FUTURES
Recent strength in stock index futures was primarily due to prospects of a less hawkish Federal Reserve. However, gains are being limited by concerns about an escalation of the war in the Middle East.
Retail sales in September increased 0.7% when up 0.3% was expected.
The 8:15 central time September industrial production report is anticipated to be unchanged and capacity utilization is predicted to be 79.6%.
The 9:00 August business inventories report is estimated to show a 0.3% increase, and the 9:00 October housing market index is forecast to be 45.
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