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Futures Market Signals Shift in US Rate Sentiment as Data Fuels Hawkish Outlook

2 weeks ago

Monday’s trading activity in the futures market suggests a potential shift towards a more hawkish sentiment regarding US interest rates. However, it’s important to note that expectations could evolve significantly as more data becomes available. The Institute for Supply Management’s manufacturing gauge climbed to 50.3 last month, indicating a halt to 16 consecutive months of contraction, albeit just above the expansion-contract threshold of 50. Concurrently, the group’s prices paid index surged to 55.8, reaching its highest level since July 2022.

Later this week, data releases are anticipated to reveal continued employment gains in March alongside moderated wage growth. Federal Reserve Chair Jerome Powell, slated to speak on Wednesday, emphasized last Friday that policymakers are awaiting further evidence of contained prices, reiterating that rate cuts would only be considered once inflation is deemed under control.

In Australia, the central bank is poised to adopt a new monetary policy implementation system due to passive quantitative tightening, leading to a decline in reserves within the banking system, as stated by RBA Assistant Governor Christopher Kent on Tuesday.

In the commodities arena, oil prices remained near a five-month peak, supported by elevated geopolitical tensions in the Middle East and reduced supply from Mexico. Meanwhile, gold stabilized after hitting a record high in the previous session, maintaining its allure amidst uncertain market conditions.

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