US index futures, along with the Dax and FTSE have been listless this morning, bouncing between -0.2% and +0.2%, with many investors apparently sitting on their hands, reluctant to commit ahead of today’s FOMC decision. Natural Gas has been active this morning with a 6.8% gain but other commodity and currency action has been quiet with WTI Crude Oil up 0.1%, Gold up 0.6% and Copper up 0.3%.
The Fed’s latest interest decision is due at 2:00 pm EDT today. The US central bank is widely expected to announce another 0.75% interest rate increase to 4.00%. Investors may also focus on any comments in the statement and press conference about how long rate hikes may continue and if the pace could slow in the coming months. Last night in testimony to the Canadian Senate Banking Committee, Bank of Canada Governors Macklem and Rogers indicated that while Canadian rate hikes are intended to continue, the pace may of increases may continue to slow (1.00%, 0.75%, and 0.50% over the last three meetings) with inflation pressures starting to ease (Canadian CPI slowed to 6.9% in September from 8.1% in June).
Ahead of the Fed, US economic data released so far this week has been positive, supporting continued monetary tightening. ADP payrolls exceeded expectations (239K vs street 195K and previous 192K). Yesterday’s ISM Manufacturing PMI, ISM Prices Paid and JOLTS job openings reports all came in better than expected as well.
Earnings reports overnight and this morning have been mixed. AirBNB ($1.79 vs street $1.48), Prudential ($2.13 vs street $2.00), and Toromont ($1.49 vs street $1.34) beat expectations, but Cenovus Energy ($0.81 vs street $0.99), Electronic Arts ($1.25 vs street $1.38) and AMD ($0.67 vs street $0.69) fell short of analyst estimates. Companies scheduled to report results later today include insurers Sun Life, Great West Life, and MetLife, plus Suncor Energy, Nutrien, and Qualcomm.