Fed Speeches Eyed as Minutes Offer No New Insight

U.S. futures are looking a little mixed ahead of the opening bell on Friday after ending the session strongly on Thursday following the release of last month’s FOMC minutes.

The minutes didn’t really tell U.S. anything we didn’t already know but investors appear to be overlooking the intention to hike this year and instead focusing on the headwinds that are being highlighted. The Fed’s credibility is being serious called into question right now and it does feel like it’s lining up the excuses should they have to do a U-turn later this year.

As it stands though, the Fed seems determined to raise rates and has yet to find evidence that the turmoil in emerging markets that rocked sentiment globally in August, has had any impact on the U.S.. The inflation outlook doesn’t look great but that has been the case for some time and even now, it doesn’t appear to be of great concern to policy makers.

Last Friday’s jobs report for many was the final nail in the coffin and Fed Funds futures certainly don’t suggest a rate hike is likely. It’s important to note though that while it was a woeful report, particularly the lack of any wage growth, there are two more to come before the December meeting. Of course if they are largely the same, the Fed may find it difficult to justify a hike but in isolation I don’t think it will make a huge difference. I don’t think October was ever really on the table.

Either way, the prospect of the first rate hike being pushed back to next year is giving the markets a boost this week. Whether that continues into next week could depend on how earnings season starts following what is likely to have been another challenging quarter. The same themes are likely to prevalent as in previous earnings reports this year being the strong dollar and weak commodity prices, it will be interesting to see how companies are coping with the growing list of headwinds.

As for today it’s looking a little light on the data front but we will hear from two FOMC voting members, Charles Evans and Dennis Lockhart, which given the focus on the Fed right now will be key. It will be interesting to get further insight into what’s changed, if anything, from the last meeting and whether the jobs report has had any significant impact on their personal stance.

The S&P is expected to open 1 point higher, the Dow 3 points lower and the Nasdaq 3 points lower.

For a look at all of today’s economic events, check out our economic calendar.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.