On Wall Street, futures on major US equity indices are pointing higher, after the S&P 500 and Nasdaq Composite indices reported their fifth consecutive session yesterday: the S&P 500 fell 0.65% to 3,588.84 points . The Nasdaq Composite lost 1.10% to 10,426.19, closing at its lowest since July 2020.
The Dow Jones Industrial Average rose 36.31 points (+ 0.12%) to 29,239.19.
At 12.15 Italian time, the futures on the Dow Jones jumped by more than 200 points (+ 0.70%), the futures on the S&P 500 advanced by 0.84%, the futures on the Nasdaq Composite reported a jump of about 1%.
The wait is for the publication of the September producer price index which will be released at 2.30 pm Italian time.
Economists interviewed by Dow Jones expect headline PPI to rise 0.2% month-on-month, after declining -0.1% in August.
The minutes from the Fed relating to the last meeting of the FOMC, the monetary policy arm of the US central bank, relating to last September 21st, when the main reference rates were raised by 75 basis points, as expected, will also be published today. and Powell & Co confirmed their intention to carry out further monetary tightening to fight inflation, which has been at its highest level since the early 1980s.
The US central bank has brought US rates into the range of 3% to 3.25%, a record since 2008, making the third consecutive tightening of 75 basis points.
A hawkish Fed assist came yesterday from Cleveland Fed Chair Loretta Mester:
“The biggest risk hanging over monetary policy is that the Fed will not raise rates sufficiently” to counter US inflation – said Mester, adding that “the Fed still needs to make progress in lowering inflation” and that “monetary policy must enter a restrictive phase”.
“The size of the Fed’s monetary tightening will depend on economic conditions,” said Mester, predicting a US unemployment rate to rise (from 3.5% now) to 4.5% by the end of 2023 and then again. highest in 2024. Cleveland Fed number one said she expects inflation to drop to 3.5% in 2023 and 2%, thus in line with the Fed’s 2% target by 2025 .
“A possible shock could slide the United States into recession,” admitted the Fed official, admitting that “the fight to lower inflation is painful, but it has to be.”
There has been a lot of talk about recession for a long time, and in the last few hours the fears about the arrival of a hard landing in the US and in the world have been rekindled by the new forecasts on global GDP growth, which the IMF, the International Monetary Fund, published yesterday updating the World Economic Outlook (WEO).
The Washington institution announced it had cut its global economic growth outlook for 2023 by 0.2 percentage points from its July estimates, estimating a 2.7% expansion. Aside from GDP trends during the global financial crisis and the peak of the Covid-19 pandemic, 2023 will see “the weakest growth rate since 2001”. World GDP in 2022 is expected to remain stable with growth of 3.2%, however almost halved by the 6% expansion in 2021.
“The worst is yet to come, and for many people 2023 will be like experiencing a recession,” reads the IMF report, which follows the warnings already issued by the United Nations, the World Bank and many CEOs.