US index futures are down 0.4%-0.5%, giving back most of yesterday’s 0.4%-0.6% US index gains. This appears to be a combination of month-end window dressing and repositioning of portfolios fading and perhaps a reluctance among investors to make any new big commitments ahead of this afternoon’s Fed interest rate decision, which is due at 2:00 pm EDT, followed by Chair Powell’s usual press conference at 2:30 pm. The FOMC is widely expected to keep interest rates on hold at this meeting, but also to suggest that the fight against inflation isn’t over and to leave the door open to further interest rate hikes. This would not be a surprise as back in September FOMC members forecast one more rate hike for this year. Barring a significant surprise or change in tone, investors may look to the statement for comments on the economy, inflation and monetary policy with an eye toward 2024.
US treasury yields are creeping upward again this morning with the 10-year trading back up above 4.90%, reflecting expectations of another “hawkish hold”. The US Dollar is also climbing today, pushing Gold back under $2,000/oz and gaining 0.2%-0.3% against the Euro, Yen and Pound. The Loonie is holding steady against the greenback gaining support from a 2.1% rally in the price of Crude Oil.
Ahead of the Fed a number of economic reports are out this morning. US October ADP payrolls improved from last month but not as much as investors had hoped (113K vs street 150K and previous 89K). Several European countries are closed for holidays today but Manufacturing PMI reports for Australia, Japan and the UK all came in below 50 in contraction territory. Canada Manufacturing PMI is due at 9:30 am EDT (previous 47.5). US ISM Manufacturing PMI (street 49.0) is due at 10:00 am, along with US Construction Spending (street 0.4%).
In earnings news, Thomson Reuters* ($1.14 vs street $0.96), and Advanced Micro Devices ($0.70 vs street $0.68) beat expectations. After the close today, results are due from Qualcomm, AirBnB, and Nutrien.
*Shares of Thomson Reuters are held in some portfolios managed by SIA Wealth Management.