Written Commentary
CURRENCY FUTURES
The U.S. dollar index advanced as interest rate differential expectations remain bullish for the greenback long term.
The euro currency is lower despite news that the euro zone September CPI estimate was up 10.0% compared to the 9.1% increase in August and the estimated increase of 9.7%.
The seasonally adjusted unemployment rate in Germany was unchanged at 5.5% in September 2022, remaining at its highest level in a year and matching market predictions.
Japanese Prime Minister Fumio Kishida instructed the government to come up with an economic stimulus package by the end of October to mitigate the impact of inflation.
STOCK INDEX FUTURES
There are ongoing worries of a global economic downturn from aggressive interest rate hikes from central banks and risks of a potential contagion from a turmoil in U.K. financial markets.
Personal income in August was up 0.3% as expected.
The 8:45 central time September PMI is anticipated to be 52.0.
The 9:00 September consumer sentiment index is predicted to be 59.5.
INTEREST RATE MARKET FUTURES
Futures are lower at the front of the yield curve and higher at the long end of the curve.
Some economists have begun to advocate for the Federal Reserve to accept a higher inflation target somewhere in the 3.0% or 4.0% range in order to avoid a severe downturn in the economy.
Federal Reserve speakers today are Thomas Barkin at 7:30, Lael Brainard at 8:00, Michelle Bowman at 10:00, Thomas Barkin at 11:30 and John Williams at 3:15.
According to financial futures markets, there is a 40.0% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 60.0% probability that the rate will increase by 75 basis points at the November 2 policy meeting.
The inverted Treasury yield curve continues to warn of economic risks ahead.
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