After yesterday’s gains on Wall Street, US index futures are suggesting that the positive momentum will remain with stocks, at least for now. There’s a flurry of US economic data due for release throughout the session, but arguably the most important news will be contained in Jerome Powell’s speech to the Economics Club of New York. This is scheduled for midday EST and critically is expected to continue clues as to the pace of policy tightening in 2019. A December rate hike is now as good as nailed on, but with inflation and economic growth both slowing, the market is understandably getting twitchy about the hawkish tone.
The idea that four rate hikes can be executed next year seems fanciful, but failure for the Fed chief to indicate that a break will be seen – preferably in the first half of 2019 – could be a trigger for fresh selling of equities, right across the board. Today’s US wholesale inventory print will also be worth watching as again an above forecast build here would underline the idea that the economy is starting to slow.
Ahead of the open we’re calling the DOW up 50 at 24,799 and the S&P up 6 at 2688.
Ongoing rate curve repricing and risk asset reaction perfectly illustrate how worryingly reliant investors have become on easy money policies