Stock Index Futures Hold Up Well

STOCK INDEX FUTURES

Stock index futures are holding up well despite weaker than expected earnings in the technology sector.

Personal income in September increased 0.4% when a gain of 0.3% was expected and the personal consumption expenditures price index advanced 0.3%, as anticipated.

The employment cost index in the third quarter increased 1.2%, as predicted.

The 9:00 central time October consumer sentiment index is estimated to be 59.7 and the 9:00 September pending home sales index is expected to be down 3.8%.

Prospects of a less hawkish Federal Reserve have supported stock index futures in recent weeks.

The technicals are becoming more supportive.

S&P 500 futures remain higher after the one-day reversal pattern to the upside on October 13.

CURRENCY FUTURES

The U.S. dollar index is higher today. However, prospects of a less hawkish Federal Reserve have undermined the greenback in recent weeks.

The economic sentiment indicator in the euro area fell for an eighth consecutive month to 92.5 in October 2022, which is the lowest level since November 2020.

Germany’s consumer price inflation increased further to 10.4% year-on-year in October 2022, which is a new all-time high and above market expectations of 10.1%.

In a recent survey a majority of economists said they expect the Bank of England  to hike its key interest rate by 75 basis points at the next policy meeting on November 3.

The Japanese yen weakened as the Bank of Japan stuck to its ultra-loose monetary policies Friday, even as the yen comes under pressure from aggressive tightening by the U.S. Federal Reserve and other central banks.

INTEREST RATE MARKET FUTURES

There are no major Federal Reserve speakers scheduled for today.

The central bank imposes a quiet period starting the second Saturday before a Federal Open Market Committee meeting during which officials refrain from commenting on the economy and monetary policy. The Fed refers to this as a “Blackout Period.”

According to financial futures markets currently, there is an 86.0% probability that the Federal Open Market Committee will increase its fed funds rate by 75 basis points at the November 2 policy meeting and a 14.0% probability that the rate will be hiked by 50 basis points.

Just a few weeks ago there was a 2.0% probability of a 100 basis point hike.

 

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