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Indices Higher, FOMC Meeting Today


Stock index futures are higher as investors look toward the Federal Open Market Committee statement at 1:00 central time and Federal Reserve Chair Powell’s press conference at 1:30.

Traders remain apprehensive in light of U.S. labor strike activity and debt ceiling issues.

Federal Reserve Building


U.S. labor strike activity and debt ceiling issues may limit the upside near term for the U.S. dollar.

However, in the longer term, interest rate differential expectations are favorable for the greenback, especially against the European currencies, since the U.S. economy appears to be holding up relatively well compared to economies in Europe.

Producer prices in Germany tumbled 12.6% year-to-year in August 2023, matching market forecasts, while accelerating from a 6.0% decline in July. This was the second consecutive month of falling prices and the steepest pace since data collection first started in 1949.

Consumer price inflation in the U.K. declined to 6.7% in August 2023 from 6.8% in July, falling under the market consensus of 7.0%. This is the lowest rate since February 2022.

This unexpected slowdown in the inflation rate caused analysts to reduce the odds of a Bank of England interest rate hike  tomorrow.

Financial futures market are now pricing in less than a 50% chance for a quarter-point hike to 5.50% by the BOE on Thursday. Earlier this week there was a 70% probability of a 25 basis point hike.

The Swiss National Bank will likely hike its key interest rate by 25 basis points at its policy meeting tomorrow.

On Friday, the Bank of Japan is likely to keep its key rate unchanged at negative 0.1%. Japan has had negative interest rates since early 2016.


The Federal Open Market Committee concludes its two-day meeting today.

The FOMC is expected to pause its interest rate hikes today for the second time this year following a slowing in inflation, while leaving the door open for another increase as early as November.

Financial futures markets are overwhelmingly pricing in no change in the fed funds rate, which currently stands at 5.25%-5.50%.

Financial futures markets are predicting there is a 99% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its Wednesday policy meeting, and there is a 1% probability of a 25 basis point increase.

There is a 29% probability that the FOMC will hike its fed funds rate by 25 basis points to 5.50%-5.75% at its November 1 policy meeting.


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Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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