Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower due to hawkish comments from Federal Reserve officials.
Philadelphia Fed President Patrick Harker was among the latest policymakers to underscore the U.S. central bank’s intention to tighten monetary policy, saying interest rates will likely increase “well above 4.0%” this year and then hold them at restrictive levels.
There are no major economic reports scheduled for today.
CURRENCY FUTURES
The U.S. dollar index is higher due to firming U.S. interest rates.
The euro currency is lower despite the belief that the European Central Bank at its policy meeting on October 27 will hike its key lending rate by 75 basis points.
U.K. retail sales fell for the second month in a row in September, declining 1.4% in real terms.
Japan’s overall consumer inflation increased 3.0% from a year earlier in September, exceeding the Bank of Japan’s 2.0% target for six consecutive months. The figure matched a 3.0% annual increase in August.
The Japanese yen fell to new lows against the U.S. dollar.
INTEREST RATE MARKET FUTURES
Futures are higher at the front of the yield curve and lower at the long end of the curve.
The U.S. 10-year Treasury yield approached the 4.3% mark, which is the highest since June 2008.
John Williams of the Federal Reserve will speak at 8:10.
According to financial futures markets currently, there is a 95.0% 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 5.0% probability that the rate will be hiked by 50 basis points. This compares to in the overnight trade an almost 100.0% probability of a 75 basis point hike.
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