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The Fed A Bit Less Hawkish?


International stock markets are mostly lower due to renewed concerns about the coronavirus variant.

Federal Reserve Chair Jerome Powell, in released prepared remarks to be delivered to the Senate Banking Committee today at 9:00 central time, indicated the emergence of the Omicron variant poses downside risks to employment and economic activity.

In my opinion, these comments could reflect a softening in the Fed’s hawkish policy stance.

The 8:45 November Chicago PMI is expected to be 68.4 and the 9:00 November consumer confidence index report is anticipated to be 110.7.

Stock index futures will probably recover later in the week. The long-term fundamentals remain bullish on balance for stock index futures.


It looks like the bull market for the U.S. dollar is over for now.  One clue, which everyone missed including me, was on Friday when all of the flight to quality vehicles advanced except the U.S. dollar. It looked odd at the time, and nobody had a good explanation.

It now looks like interest rate differential expectations are only neutral for the greenback, especially after Fed Chair Powell’s written comments in advance of his testimony today on the CARES Act.

Euro zone consumer price inflation is expected to accelerate to 4.9% year-on-year in November 2021, from 4.1% in the previous month and above market expectations of 4.5%, a preliminary estimate showed. This would be the highest rate of inflation since July 1991, and well above the European Central Bank’s target of 2.0%.

The seasonally adjusted number of unemployed people in Germany decreased by 34,000 to 2.428 million in November 2021, compared with market expectations of a 25,000 decline and bringing the total jobless level to the lowest since March 2020. This was the seventh consecutive month of decline in unemployment. The unemployment rate edged down further to 5.3% from 5.4% in October and well below the 6.2% touched in the same month of 2020.


Futures are higher on the belief that there will be a slowdown in growth in the global economy, especially after Fed Chair Powell’s comments today.

John Williams of the Federal Reserve will speak at 9:30.

Powell’s comments today suggest the Fed may be backing off a bit from its hawkish policy stance.

Follow-through gains are likely  for futures today, and the longer-term trend appears to be higher.

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