Safe Haven Buying Supports Interest Rate Market Futures

INTEREST RATE MARKET FUTURES

Safe haven buying is supporting futures across the board.

Raphael Bostic of the Federal Reserve will speak at 10:00.

It is widely expected that the Federal Open Market Committee will reduce its key interest rate again at its November meeting.

Currently there is a 60% probability that the FOMC will lower its fed funds rate by 25 basis points at its November 7 policy meeting, and there is a 40% chance that the FOMC will reduce its key rate by 50 basis points.

STOCK INDEX FUTURES

Stock index futures are lower in light of increased geopolitical tensions in the Middle East. In addition, Gulf Coast and East Coast ports dock workers went on strike early today, which threaten to disrupt supply chains nationwide, and is also having a bearish influence on stock index futures.

Yesterday Federal Reserve Chair Powell said the recent 50 basis-point interest rate cut is not a sign of similar moves ahead, and clarified that the central bank is “not on any preset course.”

His comments suggested two quarter-point interest rate cuts are likely this year.

The 8:45 central time September manufacturing PMI is expected to be 47.0.

There are three 9:00 reports. The September Institute for Supply Management manufacturing index is anticipated to be 47.6, and the August construction spending report is predicted to show a 0.3% decline. The August job openings and labor turnover survey (JOLTS) is forecast to be 7.7 million.

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 higher in a flight to quality move in light of increasing geopolitical risks in the Middle East.

Inflation in the euro zone fell to below the European Central Bank’s target for the first time in over three years. Consumer prices increased 1.8% on the year in September, which is down from the 2.2% rate in August. This is the first time since June 2021 that the annual inflation rate was below the European Central Bank’s 2.0% target.

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