Financial markets seem be increasing their dovish views with three major economic events in the next week.
The charts and news events below paint a picture of slowing economic growth and inflation. That’s making investors think the Federal Reserve will skip a rate hike next week, and potentially cut in the first quarter of 2024.
First, job openings fell to 8.7 million in October — about 450,000 fewer than expected. The total is now back to its lowest level since March 2021. That’s consistent with a weaker job market and could potentially argue against further rate hikes.
![](https://cdn.tradestation.com/uploads/sites/2/jolts_20231205-1024x515.jpg)
Second, the yield on the 10-year Treasury note dropped to 4.17 percent yesterday. It’s the lowest level since September 1, and could reflect a belief that interest rates will decline over the longer term.
![](https://cdn.tradestation.com/uploads/sites/2/TNX_20231205-1024x494.jpg)
Third, crude oil futures (@CL) closed at their lowest price since July 20. Lower energy prices can reduce inflation.
![](https://cdn.tradestation.com/uploads/sites/2/CL_oil_20231205-1024x494.jpg)
Fourth, the Atlanta Fed’s estimate of economic growth in the fourth quarter has dropped by almost half since late November. Slower economic growth would typically drive down interest rates.
![](https://cdn.tradestation.com/uploads/sites/2/gdp_now_20231205a.jpg)
Those bring us to the fifth chart: CME’s FedWatch tool. Notice how odds of a cut in March have grown in the last week.
![](https://cdn.tradestation.com/uploads/sites/2/FedWatch_march2024_20231205.jpg)
Here’s a lineup of the big economic events that could impact rates:
- Friday (12/7) at 8:30 a.m. ET: Non-farm payrolls
- Tuesday (12/12) at 8:30 a.m. ET: Consumer price index (CPI) inflation report
- Wednesday (12/13) starting at 2 p.m. ET: Fed meeting and press conference
Finally, some news developments could keep rates lower. These headlines are also consistent with potentially slower economic growth and lower inflation:
- Factory orders fell 3.6 percent in October, a full percentage point more than expected.
- Moody’s placed China’s credit rating on negative outlook, citing heavy public debt levels and “persistently lower medium-term economic growth.”
- The American Petroleum Institute said crude-oil inventories rose by 594,000 barrels, missing forecasts for a drop of 2.267 million. (Higher inventories are typically bearish for oil prices.)
- Reuters separately reported that commodity traders see little chance of OPEC+ significantly reducing production after agreeing to only voluntary cuts last week.