US futures weak, after the strong recovery of yesterday’s session. At about 8.50 am Italian time, the futures on the Dow Jones up by 0.15%, those on the S&P 500 up by 0.20% and the futures on the Nasdaq up by 0.30%.
Yesterday the Dow Jones Industrial Average closed the session up 435.98 points, or + 1.40%, at 31,581.28; the S&P 500 was up 1.83% to 3,979.90 and the Nasdaq Composite jumped 2.14% to 11,791.90.
The positive trend was supported by the turnaround in US Treasury rates, after the highs tested in previous sessions. And yet the statements coming from the world of the Federal Reserve and economists are confirmed as hawkish, on the day when the ECB will be observed special.
Goldman Sachs sees a more aggressive Jerome Powell Fed, with chief economist Jan Hatzius now with his team expecting a rate hike of 75 basis points at the next September meeting, compared to the previously expected 50-point squeeze.
Goldman Sachs is also betting on a 50 basis point rate hike in November, compared to the estimated 25 basis point squeeze to date, and a 25 basis point hike in December.
Still on the US interest rate front, Federal Reserve Vice President Lael Brainard yesterday confirmed the American central bank’s determination to continue to fight against inflation, underlining that the flare-up in prices is eroding especially families with lower incomes.
“We will continue for as long as it takes to bring down inflation – said Brainard, according to the CNBC – So far, we have raised rates quickly at the peak of the previous cycle, but rates have to rise again”.
However, the markets today will look above all to Christine Lagarde’s ECB: today is ECB Day: in the face of an inflation rate that in the Eurozone was equal to 9.1% in August, and with the forecasts of a race of prices at a rate of more than + 10% in the coming months, economists have bet in recent sessions on a tight jumbo of 75 basis points.
In the last few hours, rumors have circulated that Lagarde is proposing to the hawkish members of the ECB to raise rates not by 75 basis points but, in a context of gas panic triggered by the stop of gas flows from Russia to Europe through the pipeline Nord Stream 1, and in the wake of the various alerts on the arrival of a recession, of 50 basis points.
On 21 July Christine Lagarde’s ECB raised rates for the first time since 2011 and surprisingly with a rise of 50 basis points, even if the market was already partially prepared for a more substantial rise.
The ECB raised the three main reference rates, namely the interest rates on main refinancing operations, on marginal lending operations and on deposits with the central bank by 50 basis points, respectively to 0.50%, to 0.75 % and 0.00%, with effect from 27 July 2022, marking the end of the era of negative rates.