Written Commentary
CURRENCY FUTURES
Despite the war in the Mideast, a safe-haven flow of funds has only marginally supported the U.S. dollar as prospects of a less hawkish Federal Reserve have undermined the U.S. dollar.
The greenback is lower today and peaked on October 3 when there were reports that the Bank of Japan intervened in foreign exchange markets to support the yen by selling U.S. dollars and buying yen.
STOCK INDEX FUTURES
Stock index futures advanced on Friday when analysts took a closer look at the quality of jobs that were created. Yesterday’s driver behind higher prices was the on balance dovish comments from Federal Reserve officials.
Fed Vice Chair Jefferson and Dallas Fed President Logan indicated the recent run-up in yields might reduce the need for additional interest rate hikes.
The National Federation of Independent business Small Business Optimism Index decreased for a second month to 90.8 in September 2023 from 91.3 in August and well below market forecasts of 91.4. This was the lowest figure in four months.
On Friday S&P 500 futures rallied above a steep downtrend line.
INTEREST RATE MARKET FUTURES
The Treasury will auction 3-year notes.
Federal Reserve speakers today are Raphael Bostic at 8:30, Christopher Waller at 12:30, Neel Kashkari at 2:00 and Mary Daly at 5:00.
In the last few days there has been a sizable downshift in prospects for a more hawkish Federal Reserve policy.
Financial futures markets are now predicting there is an 82% probability that the Federal Open Market Committee will keep its fed funds rate unchanged and an 18% probability of a 25 basis point increase at its November 1 policy meeting.
The Federal Reserve’s target range for the fed funds rate currently is 5.25% to 5.50%.
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