Investors Consider Monetary Policy Related News While Awaiting OPEC+ Decision

Building on Tuesday’s gains, US index futures are up 0.3%-0.6% this morning. Over in Europe, the Dax is up 1.0%, while the FTSE is down slightly. In Asia Pacific trading, the Hang Seng dropped 2.0% overnight. Treasury yields continue to retreat with the US 10-year treasury note yield sliding below 4.30%.

The Reserve Bank of New Zealand maintained its benchmark Overnight Cash Rate at 5.50%, where it has been holding since May. In the accompanying statement, and in its OCR future path forecast, the RBNZ left the door open to possible interest rate increases next year if needed and suggested that rate cuts may not come until sometime in 2025, which was a bit more hawkish than its last forecast in August.

Between this news and the Reserve Bank of Australia’s rate hike earlier this month, it appears that central bank thinking toward 2024 monetary policy may not be as dovish as the recent dropoff in treasury yields seems to have implied. Later today the Fed’s Beige Book report is due which may shed light on financial and economic conditions across the various regions of the United States. In today’s update US Q3 GDP was revised upward more than expected (5.2% vs street 5.0% and previous 4.9%) while the inflation component of GDP held steady at 3.5%. Core PCE inflation, the Fed’s favorite measure is out tomorrow morning.

Continuing the recent theme of clothing retailers beating the street and everyone else struggling this US retail earnings season, Foot Locker exceeded expectations ($0.30 vs street $0.21, up 11.1% premarket), while Dollar Tree ($0.97 vs street $1.01, down 2.1% premarket) has disappointed.

A 0.8 mmbbl drawdown in US API weekly crude oil inventories and disruptions related to a big storm in the Black Sea have US and Brent Crude Oil prices climbing 1.7% and 1.4% respectively this morning. US weekly DOE energy inventories are due at 10:30 am EST today and the latest OPEC+ decision on production levels for 2024 is expected tomorrow. Metals are quiet so far today, with Gold trading near $2,040/oz.

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