US futures down on Wall Street awaiting the publication of today’s market mover, which will influence the trend of global markets, also giving crucial information to Jerome Powell’s Fed, in view of the meeting on 13-14 December.
This is the US employment report for the month of November, which will be announced at 2.30 pm, Italian time: economists interviewed by Dow Jones expect that, in November, new jobs increased by 200,000 units, down on to growth of 261,000 units in October.
Investors’ attention remains on other crucial macro data released yesterday, in particular core inflation as measured by the Fed’s preferred core PCE index:
the index rose on an annual basis by 5%, as expected, slowing down from 5.2% in September (data revised upwards from the +5.1% initially disclosed). On a monthly basis, the core PCE rose by 0.2%, slower than the estimated +0.3% and weakening compared to the previous increase, in September, equal to +0.5%.
The PCE headline index grew by 6% year-on-year, below the estimated +6.2% and against the previous +6.2%. On a monthly basis, the increase was 0.3%, less than the +0.5% expected and compared to the previous +0.3%.
The numbers support the views of those who believe that US inflation has peaked and that Jerome Powell’s Fed could launch less aggressive rate hikes.
Also published yesterday was the US ISM manufacturing index, which contracted for the first time since May 2020. The indicator compiled by the Institute for Supply Management fell in November to 49 points from 50.2 the previous month, below of the Bloomberg consensus (49.7 points) and, for the first time since the lockdowns, below the 50-point threshold that separates expansion and contraction.
“Taking the two data together” – core PCE index and worse-than-expected manufacturing ISM – Chris Hussey of Goldman Sachs wrote in a note that what emerges tends to “suggest a soft landing for the US economy, provided that the economy doesn’t get any worse.”
The two figures also further confirm the possibility, which Jerome Powell himself spoke of, that in December the rate hike will take place in a less aggressive manner.
In a speech at the Brookings Institute the day before yesterday,
Powell said what the markets were hoping for, sparking a Wall Street buying boom that sent the Nasdaq soaring more than 4% and the Dow Jones soaring more than 700 points (+2.18%).
“It makes sense to moderate the pace of interest rate hikes,” Powell said, confirming the “significant progress” the Fed has made “in making (monetary) policy tight enough.”
But, he added, “there is still work to be done” and “it is likely that we will need to maintain the restrictive policy for some more time” in order to fight inflation. On the other hand, “history sends a strong warning about the risk of easing monetary policy prematurely”, explained Jerome Powell, noting that “we have a long job to do to restore price stability”.
In short: “It will take many more tests before we can be sure that inflation is really going down – said the Fed helmsman – By any standard, inflation remains too high”.
The central banker confirmed his view that fed funds rates are likely to rise to 5% or more. Not quite dovish statements.
The post-Powell euphoria thus lasted for one session: yesterday Wall Street closed in the red: the Dow Jones lost 194.76 points (-0.56%), to 34,395.01 points; the S&P 500 lost 0.09% to 4,076.57 points, while the Nasdaq closed slightly higher, rising 0.13% to 11,482.45.
Futures now down: those on the Dow Jones are down 0.10%, those on the S&P 500 are down 0.16% and those on the Nasdaq are down 0.35%.