Fed Chair Powell Speaks This Morning
STOCK INDEX FUTURES
Stock index futures are mixed ahead of Federal Reserve Chair Powell’s 11:40 central time speech to the Economic Club of Washington. Traders will be closely watching for clues about how much more the central bank may tighten financial conditions.
The 2:00 December consumer credit report is expected to show a $25 billion increase.
Futures are likely to advance once Powell’s speech is out of the way.
The longer term technical aspects for stock index futures remain supportive.
The U.S. dollar index firmed due to the belief that Powell’s speech may be hawkish on balance.
Interest rate differentials are neutral for the U.S. dollar index and breakouts for the greenback are likely to fail in both directions.
Industrial production in Germany declined sharply by 3.1% month-over-month in December of 2022, after an upwardly revised 0.4% gain in November and worse than market forecasts for a 0.7% decline.
The Reserve Bank of Australia raised its cash rate by 25 basis points to 3.35% at its policy meeting today, matching analysts’ expectations.
All household spending in Japan declined 1.3% when down 0.2% was predicted.
INTEREST RATE MARKET FUTURES
Minneapolis Federal Reserve Bank President Neel Kashkari warned that the U.S. central bank needs to keep raising interest rates. He said, ”We need to raise rates aggressively to put a ceiling on inflation, then let monetary policy work its way through the economy.”
The Treasury will auction three-year notes today.
Michael Barr of the Federal Reserve will speak at 1:00.
Most likely the Federal Open Market Committee will increase its fed funds rate by 25 basis points at its March meeting.
Futures are likely at to advance once Powell’s speech is out of the way.
The long term outlook for futures is higher.
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