Today’s Spotlight Market
While the baseball playoffs are in full swing, traders seem to have adapted Fed watching as their new national pastime. The minutes from last month?s Federal Open Market Committee meeting showed a divided Fed. Ultimately, the FOMC elected to not raise rates in September, but Fed Funds futures point to the chance of a December rate increase at 60%.
Fundamentals
The labor market in the USA continues to show strength. Initial jobless claims continue to be at near record lows. The week of October 2-8 had 246,000 people apply for unemployment benefits, a 43 year low. The less volatile 4 week average of jobless claims is also at near record lows at 249,250. A tight labor market could lead to wage push inflation as employers have to raise wages in order to attract and retain employees. The uncertainty from earlier this year, first from concerns over a slower growth rate in China and then secondly from the UK?s shock decision to leave the European Union has subsided. However, GDP growth in the USA has been slower than originally forecast and there is uncertainty going into the general election in November.
Technical Notes? -? View Today’s Chart
Turning to the 2016 continuation chart for the E-mini S&P chart, we see a short-term bearish pattern has emerged. However, the recent pullback still has the contract trading above the 2000 level, which was support after the EU referendum and far above the 1800 support level during the first two months of 2016. The 20 day simple moving average is now short term resistance. 14 day RSI is a mildly bearish 41.28
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