What to expect from such a busy Day!
After yesterday's great PMI numbers and earnings reports, which sent the leading indices of Wall Street to new records high, today we have another heavy day with too much data, important earnings, and FOMC meeting and press conference.
Today on the data front, market participants will focus on US ADP employment and PMI data. Even if ADP's correlation with NFP since the outbreak of the pandemic is changed, it is expected that this data still can attract attention. Market expectation is to see an increase of 400,000, which is lower than the 568,800 last month. On the other hand, the market expects that the ISM non-manufacturing PMI and the Markit service PMI will remain at the expansion level, at 62.0 and 58.2 respectively.
And then, the market will focus on the Federal Reserve FOMC to announce its decisions about the interest rate and monetary policies. A bit after publishing the announcement, Fed Chair, Mr. Powell will also hold a press conference half an hour after the resolution. The market expects the Fed to maintain the benchmark interest rate at a low level. However, given that inflation in the United States continues to increase and has almost reached its highest level in 40 years, it is expected that the central bank will also announce a reduction in bond purchases. This is also a major issue that policymakers cannot ignore. If the central bank does not reduce the scale of bond purchases in time, then the yield will face upside risks, which will further stifle the economy.
Just to remember, two weeks ago I had a note about the FED Beige book, and how I mentioned there, one of the main concerns there was the supply chain and its concerns. 10 states out of 12 states that have had collected report information, expressed concern about supply shortages. So, it can also play the role in the decision-making progress. Maybe FOMC members see that as a reason, to continue the support to avoid any pause on the recovery path.
It is not just about the US, today we had the PMI data from other developed economies as well. So far, Chinese service PMI at 53.80 shows that service sectors in China are also the same as manufacturing sectors, despite the latest slowdown, still increasing, and we can count on it. The same improvement we saw in the UK service PMI increased to 59.1 in October from 55.4 in September. Besides great PMI numbers, we had Eurozone employment data as well. The Eurozone unemployment rate in September fell to 7.4% from 7.5% of the month earlier.
Market trading so cautiously with a slow downward trend, all across the board. Asian leading indices closed lower with 0.2% on average, European leading indices trading with 0.1% lose on average, and US futures are mixed with 0.1% lose in DJI and SP 500 charts, while Nasdaq gaining 0.05%.
