Written Commentary
STOCK INDEX FUTURES
The Federal Reserve released its “Beige Book” on the economy yesterday, which stated U.S. businesses are becoming more pessimistic about economic conditions in the face of high inflation and rising interest rates. The Fed’s 12 regional districts said business contacts noted “growing concerns about weakening demand.”
This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Federal Reserve district bank compiles anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts.
Jobless claims in the week ended October 15 were 214,000 when 230,000 were expected.
The October Philadelphia Federal Reserve manufacturing index was negative 8.7 when negative 5.0 was anticipated.
The 9:00 central time September existing home sales report is predicted to be 4.695 million.
The 9:00 September leading indicators report is estimated to be down 0.3%.
The technicals are becoming more supportive.
CURRENCY FUTURES
The U.S. dollar index is lower today and has been underperforming the news in recent weeks.
The annual producer inflation in Germany was 45.8% in September 2022, which is unchanged from August’s record high figure, and above market forecasts of 44.7%.
Australia’s unemployment rate was unchanged in September at 3.5%. Employment increased by only 900 people in September, with the participation rate unchanged from August at 66.6%.
The Japanese yen fell to the key psychological level of 150 per dollar for the first time since August 1990, increasing speculation that the government would intervene again in the currency markets to support the yen.
INTEREST RATE MARKET FUTURES
Futures are lower.
Federal Reserve speakers today are Patrick Harker at 11:00, Philip Jefferson at 12:30, Lisa Cook at 12:45 and Michelle Bowman at 1:05.
According to financial futures markets, there is a 97.0% 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 3.0% probability that the rate will be hiked by 50 basis points.
Last week there was a 2.0% probability that the FOMC could increase its fed funds rate by 100 basis points.
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