The better US jobs data, keeps the Fed on track toward a 75 basis point hike in early November and another 50 basis points in December. That would bring the Fed target rate to 4.5%. The question is what will the terminal rate be and when? The Fed dot plot saw a terminal rate at 4.6% in 2023 which implies just a single 25 basis point hike in 2023. The Fed is looking at the 4.50-4.75% rate as being restrictive. Is it restrictive enough?
PS There is a 92% chance of a 75 basis point hike at the November meeting
Next week, the US CPI and PPI data will be released.
A snapshot of the market after the initial minutes of trading shows:
- Dow down -341 points or -1.12% at 29595.33
- S&P down -51.59 points or -1.84% as 3692.94
- Nasdaq down -203.57 points or -1.84% at 10869.74
- Russell 2000 down -21.32 points or -1.22% at 1731.18
A look at other markets currently shows:
- 2 year yield 4.30%, +5.0 basis point
- 5 year yield 4.13%, +7.2 basis points
- 10 year yield 3.89%, +616 basis points (the high yield reached 4.01% in 2022 so far)
- 30 year yield 3.858%, +6.6 basis points
in other markets:
- spot gold is down around $10 at $1701.95 as it reacts to the the dollar higher/ rates higher trends
- spot silver is down $0.21 or -1.55% at $20.32
- crude oil is trading up $1.52 at $89.92
- The price bitcoin is trading below the $20,000 level at $19,588
A snapshot of the currency markets shows the CAD is the strongest while the EUR is the weakest. The US dollar is mixed after trading lower before the report.
