Written Commentary
CURRENCY FUTURES
The U.S. dollar index is higher due to hawkish Federal Reserve comments.
However, it appears that the U.S. dollar has topped for now on the belief that that the Federal Reserve may soon tone down its hawkish rhetoric.
The euro zone September services PMI was 48.8 when 48.9 was estimated.
U.K. businesses last month suffered the sharpest contraction in activity since early last year, although the downturn was a little less severe than first estimated.
STOCK INDEX FUTURES
Stock index futures are lower after Federal Reserve speakers offered no clues as to when the central bank will become less hawkish.
Mortgage applications sank 14.2% in the last week of September, which is the biggest drop since April 2020, pushing the index to the lowest level since 1997.
The September Automated Data Processing, Inc. employment report showed an increase of 208,000 when up 200,000 was expected.
The 8:45 central time September services PMI is anticipated to be 49.2.
The 9:00 September Institute for Supply Management services index is predicted to be 56.0.
On Monday futures broke out above major downtrend lines.
INTEREST RATE MARKET FUTURES
Futures are lower after Federal Reserve Governor Philip Jefferson said reducing inflation was the central bank’s top priority and San Francisco Fed President Mary Daly said officials must “follow through” with interest rate hikes.
These remarks on Tuesday reinforced the message from other officials at the U.S. central bank that interest rates will continue to increase following 75 basis point increases at their last three policy meetings.
Raphael Bostic of the Federal Reserve will speak at 3:00.
According to financial futures markets, there is a 34.0% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 66.0% probability that the rate will increase by 75 basis points at the November 2 policy meeting.
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