Stock index futures showed little movement on Monday as traders prepared for the Federal Reserve’s upcoming monetary policy announcement later in the week.
S&P 500 futures increased by 0.1%, Nasdaq 100 futures remained unchanged, and Dow futures rose by 0.2%.
The 10-year Treasury yield stayed flat at 3.65%, while the 2-year yield decreased by 2 basis points to 3.57%.
U.S. stocks concluded higher on Friday, ending a volatile week of trading with gains. The market continued to debate whether the Federal Reserve would begin rate cuts next week with a substantial half-percentage point reduction.
Jim Reid of Deutsche Bank noted that by the end of the week, markets received a further boost as the possibility of a 50 basis point rate cut by the Federal Reserve resurfaced, providing a fresh uplift for equities and bonds.
The Federal Reserve is scheduled to meet on Tuesday and Wednesday, with widespread expectations of a rate cut. According to CME Group’s FedWatch Tool, approximately 41% of traders anticipate a rate cut of 25 basis points, while 59% expect a 50 basis point reduction.
Paul Donovan of UBS commented that a rate cut is anticipated as inflation pressures in the U.S. continue to diminish. However, he suggested that a rate cut of more than 25 basis points seems unlikely, noting that while the Federal Reserve may be late in cutting rates, a more significant move could be perceived as a sign of panic. He predicts higher frequency cuts rather than larger single cuts.
On the political front, former President Donald Trump was reported safe following what the Federal Bureau of Investigation described as an apparent assassination attempt on Sunday at his golf course in West Palm Beach, Florida.
