Bank of England Hikes Rates

STOCK INDEX FUTURES

Stock index futures are higher despite news of planned increased job cuts. According to Challenger, Gray and Christmas, Inc., U.S. based companies announced plans to cut 25,810 jobs from their payrolls in July of 2022, which is a 36.3% increase from the 18,942 cuts announced in July of 2021.

Jobless claims in the week ended July 30 were 260,000 as expected.

Despite an ongoing hawkish tone to Federal Reserve officials’ comments, stock index futures are holding up well.

CURRENCY FUTURES

Factory orders in Germany dropped 0.4% month-over-month in June of 2022, after a downwardly revised 0.2% decline in the prior month and compared with market forecasts of a 0.5% decrease. It was the fifth consecutive month of lower manufacturing orders.

The Bank of England raised its key interest rate by 50 basis points to 1.75% from 1.25%. The central bank has increased borrowing costs at six straight meetings of its monetary policy committee, which is the longest streak since the late 1990s. The increase was the largest since 1995.

The Bank of England warned the U.K. economy was poised to enter into its longest recession since the financial crisis.

Australia’s trade surplus widened to a new record peak of AUD 17.67 billion in June 2022 from a downwardly revised AUD 15.02 billion in the previous month and easily beating market estimates of a surplus of AUD 14 billion, as exports increased much more than imports

INTEREST RATE MARKET FUTURES

Futures are higher across the board as the  inverted Treasury yield curve continues to flash warnings of economic risks.

Loretta Mester of the Federal Reserve will speak at 11:00.

According to financial futures markets, there is a 57.5% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 42.5% probability that the rate will increase by 75 basis points at the September 21 policy meeting.

Higher prices are likely across the board for the interest rate market futures, despite the hawkish Fed, as the U.S. economy continues to weaken.

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