Fed Day Communication | Morning Express | 11/02/2022
Posted: Nov. 2, 2022, 9:15 a.m.
E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at 3866.00, down 17.00
NQ, yesterday’s close: Settled at 11,332.00, down 115.25
Fundamentals: Today is Fed Day, and the committee is expected to hike rates by 75bps at 1:00 pm CT. Then, Fed Chair Powell holds his traditional post-policy meeting press conference at 1:30 pm CT. As we have discussed in recent days, it is less about today’s decision and more about the communication the bank provides for its next meeting in December. There have certainly been bullish tailwinds building as anticipation mounts that the Fed signals it will slow the pace of hikes from 75bps to 50bps in December. Yesterday’s risk-on start to the month had set fresh swing highs in the S&P, Dow, and Russell 2000 before it was derailed by better-than-expected data. At the heart of yesterday’s dataset was JOLTs Job Opening for September, which showed 717,000 more openings than the 10 million expected. It also revised last month’s ‘light at the end of the tunnel’ number higher by 227,000. Essentially, there are a million more jobs to be filled than expected, and markets quickly discounted less likeliness the Fed will signal slowing the pace of hikes at today’s meeting. ISM Manufacturing PMI and final SPGI Manufacturing PMI, both for October, edged out beats, but quietly ISM Manufacturing Prices contracted for the first time since May 2020. If the economy is humming along and demand shows no signs of curtailing, then why should the Fed slow the pace of hikes? This was our exact discussion here yesterday, and we invite you to read it.
Do not miss our daily Midday Market Minute, from yesterday.
Today, the first glimpse of October jobs via the private ADP survey showed 239k created versus 195k expected, while revising September lower by 16k.
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NQ (December)
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Crude Oil (December)
Yesterday’s close: Settled at 88.37, up 1.84
Fundamentals: Crude Oil remains resilient but still unable to chew through strong resistance at the $90 mark. A renewed wave of strength came from surprise draws on last night’s private API survey that showed Crude inventories falling by -6.53 mb and Gasoline by -2.64 mb (Distillates +0.865). Rumors that China will relax its zero-virus policy have also added bullish tailwinds as anticipation for a reopening of sorts builds. Citi has been vocally negative on the Oil market since the onset of the year, even releasing a sell recommendation before the Russian invasion of Ukraine. However, the bank has flipped, noting Crude Oil is likely to see upward pressures into December.
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Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1649.7, up 9.0
Silver, yesterday’s close: Settled at 19.667, up 0.548
Fundamentals: Gold and Silver have arguably held ground well given the slew of stronger-than-expected data, JOLTs, Manufacturing PMI, and now ADP Payrolls. There has been a trend in precious metals, when they are moving lower, they stay heavy into month-end but commonly find renewed strength at the onset of a fresh month. This is certainly taking place right now as they also consolidate ahead of today’s FOMC policy decision. At the end of the day, what do the U.S. Dollar and rates do, this will dictate whether Gold and Silver can hold onto a decent start to the session.
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Silver (December)
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