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Stock index futures were mixed Friday with Fed chief Jerome Powell speaking in the morning and afternoon.
S&P futures (SPX) were -0.1%, Nasdaq 100 futures (NDX:IND) were -0.3%, and Dow futures (INDU) were +0.1%.
Following a historic November rally, the broader market still has a chance to notch five winning weeks in a row. Going into Friday’s trading, the S&P (SP500) is up 0.2% for the week. The Nasdaq (COMP.IND) is down 0.2%, while the Dow (DJI) is up 1.6%.
Powell will speak at a fireside chat at Spelman College at 11 a.m. ET. He also has a roundtable at the same event at 2 p.m. ET.
“Market moves have been so great since he suggested that tight financial conditions were doing some of the Fed’s job for them (November 1st) that you have to think he will address the subsequent moves and either push back or endorse,” Deutsche Bank’s Jim Reid said. “On balance I think he may take a similar tone to Williams yesterday and push back a little while acknowledging the progress that has seemingly been made.”
The 10-year Treasury yield (US10Y) fell 2 basis points to 4.33%. The 2-year yield (US2Y) fell 4 basis points to 4.68%.
“According to the Fed’s term premium model, there is a term ‘discount’ of 25bp in the US 2yr, which suggests that it is rich by 25bp versus what’s discounted for rate expectations in the next two years,” ING said. “However, we’d argue that the current rate discount will deepen further once we get to the point where the Fed is actually cutting rates.”
“That leaves us comfortable with the 2yr yield maintaining an implied discount to future rate expectations. That said, for players that believe in the higher-for-longer narrative, then the 2yr yield is too low, by at least 25bp.”
Shortly after the start of trading, the November ISM manufacturing index arrives. Economists expect a rise to 47.6.
“A sentiment poll is not the same thing as reality,” UBS’ Paul Donovan said. “The US manufacturing ISM survey has reported the US manufacturing sector has been getting worse and worse all year. US manufacturing output has been stable all year.”
At the same time, October construction spending hits. The consensus if for 0.4%.
