World Bank Cuts Global Growth Outlook
INTEREST RATE MARKET FUTURES
Futures are higher despite recent hawkish comments from Federal Reserve officials.
Yesterday the World Bank sharply reduced its economic growth forecasts for most countries, and warned that new adverse shocks could tip the global economy into a recession. Global gross domestic product will probably increase 1.7% this year, which is about half the pace forecast in June. The bank also cut its growth estimates for 2024.
The U.S. Treasury will auction 10-year notes today.
According to financial futures markets currently, there is a 79.0% probability that the Federal Open Market Committee will increase its fed funds rate by 25 basis points at the February 1 policy meeting and a 21.0% probability that the rate will be hiked by 50 basis points.
Longer term, higher prices are likely for futures across the yield curve.
STOCK INDEX FUTURES
Stock index futures are higher despite recent hawkish comments from Federal Reserve officials.
Mortgage applications increased 1.2% in the first week of January 2023, following a 10.3% plunge in the last week of 2022.
The January Atlanta Federal Reserve business inflation expectations report will be released at 9:00 central time. Inflation expectations in December were 3.1%.
Futures are recently performing well for the news.
The U.S. dollar index is higher due to recent hawkish comments from Federal Reserve officials.
Interest rate differential expectations are neutral.
Japanese households’ inflation expectations edged up in the three months to December, according to a central bank survey.
Data from the Australian Bureau of Statistics showed retail sales in Australia jumped 1.4% in November from October to a record. That was more than twice the median forecast of 0.6%, and October’s result was revised up sharply to an increase of 0.4% from an originally reported drop of 0.2%.
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