Ongoing Hawkish Comments from Fed

CURRENCY FUTURES

The U.S. dollar index is higher due to ongoing hawkish Federal Reserve comments.

However, it appears that the U.S. dollar has topped for now on the belief that the Federal Reserve later this year may tone down its hawkish rhetoric.

The Halifax house price index in the U.K. increased 9.9% year-on-year in September of 2022, which is the lowest level in eight months. Compared to the previous month, house prices edged down 0.1%, and fell for the second time in three months.

Retail sales in Germany shrank 1.3% month-over-month in August of 2022, following a downwardly revised 0.7% gain in July and compared to market predictions of a 1.1% decline.

STOCK INDEX FUTURES

Nonfarm payrolls in September increased 263,000 when a gain of 275,000 was expected.

The unemployment rate was 3.5%, which compares to the anticipated 3.7%.

Average hourly earnings increased 0.3%, as predicted.

The 9:00 central time August wholesale inventories report is expected to show a 1.3% increase.

The 2:00 August consumer credit report is expected to show a $25 billion increase.

Federal Reserve speakers offered no clues as to when the central bank will  become less hawkish.

In spite of lower prices today, futures remain above major downtrend lines.

INTEREST RATE MARKET FUTURES

The employment numbers were mixed. However, futures are lower as traders focus on the dominant influence of the ongoing hawkish commentary from Federal Reserve officials.

Federal Reserve Board of Governor Christopher Waller said he doesn’t anticipate market instability to prompt a premature policy pivot.

Federal Reserve Bank of Cleveland President Loretta Mester said the U.S. central bank has more work to do to tame inflation and she has not seen the evidence needed to convince her that officials should slow the pace of interest rate increases.

Federal Reserve speakers today are John Williams at 9:00, Neel Kashkari at 10:00 and Raphael Bostic at 11:00.

According to financial futures markets, there is a 20.0% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and an 80.0% probability that the rate will increase by 75 basis points at the November 2 policy meeting.