Federal Reserve Becomes More Hawkish
STOCK INDEX FUTURES
Stock index futures declined yesterday with follow-through today due to hawkish comments from two Federal Reserve officials.
March S&P 500 futures gapped under a trendline this morning.
This gap will likely be closed over the next few days.
The U.S. dollar index erased losses for the year due to hawkish remarks from Federal Reserve officials.
Inflation numbers in Europe have recently come in lower.
The annual producer inflation in Germany dropped to 17.8% in January 2023 from 21.6% in December 2022, hitting the lowest level since September 2021.
Yesterday it was reported that Ireland’s consumer price inflation rate eased for a third consecutive month to 7.8% year-on-year in January 2023, which was the lowest since last May.
U.K. retail sales increased unexpectedly last month with the help of heavy discounting. The total volume of goods sold in stores and online increased 0.5% in January after a 1.2% decline in December. Economists had predicted a drop of 0.3%.
INTEREST RATE MARKET FUTURES
Futures were lower on Thursday with follow-through today after yesterday Cleveland Federal Reserve President Loretta Mester said she sees a “compelling economic case” for another 50 basis point rate increase, while St. Louis Fed President James Bullard said he would not rule out backing a half-percentage point hike at the Fed’s March meeting.
Federal Reserve speakers today are Thomas Barkin at 7:30 and Michelle Bowman at 7:45.
Most likely the Federal Open Market Committee will increase its fed funds rate by 25 basis points at its March 22 policy meeting and there is more talk of another 25 basis point hike at the May meeting.
The severely inverted yield curve is getting little attention now.
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