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On September 17th, local time, the Federal Reserve held its September 2026 FOMC meeting, raising the target range for the federal funds rate to 3.75%-4.00%. Donghai Securities analyst Liu Sijia stated that the Feds 25bp rate hike was in line with market expectations. Before the meeting, the market had already priced in a rate hike with a probability exceeding 90%. Besides fulfilling the hawkish stance since the Jackson Hole meeting, this also helps to rebuild the Feds image of independence and reduce the upward risk of the term premium in long-term US Treasury yields. Currently, CME data shows a probability of around 50% for an October rate hike and nearly 90% for another rate hike this year, close to the expectations shown in the dot plot. However, without the inflationary concerns arising from rising oil prices due to supply factors, the current K-shaped economic divergence in the US and the weak balance in the labor market with declining supply and demand do not support the Fed initiating a cyclical series of rate hikes. Warsh also stated that current financial conditions are not restrictive, and this rate hike is a partial withdrawal of easing. Whether a cyclical series of rate hikes will begin remains uncertain.The yield on 30-year UK government bonds fell 5.9 basis points on the day, currently trading at 5.8003%.ECB Governing Council member Rehn: The tightness of the Eurozone labor market after the Ukraine conflict and the post-pandemic crisis is not the same as in 2022.Bank of England: GDP growth is expected to be 0.4% in the third quarter (compared to a 0.1% growth forecast in July).ECB Governing Council member Rehn: The ECB closely monitors the "political situation" in Europe and has an effective toolbox to ensure the smooth transmission of monetary policy.

Natural Gas prices fall below $2.70 despite USD Index attempts to recover, and demand concerns grow

Alina Haynes

Mar 14, 2023 13:12

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After a perpendicular recovery to close to $2.70 in the Asian session, Natural Gas futures have turned sideways. Weakness in the US Dollar Index (DXY), in general, has aided the upward bias in natural gas prices. Natural Gas futures appear vulnerable near $2.70 as the USD Index has demonstrated a recovery move to near 103.90 as investors become anxious ahead of the release of the United States Consumer Price Index (CPI) data.

 

The Federal Reserve's decision to raise interest rates is anticipated to have a negative impact on industrial demand for natural gas (Fed). The market anticipates that Fed chair Jerome Powell's scheduled rate hikes will lead to a recession in the near future.

 

Meanwhile, Winter is nearing its conclusion and summer has not yet arrived. Consequently, demand for residential purposes to heat domestic spaces will remain low. Additionally, because residences will require less electricity to operate air conditioners, power companies are less reliant on natural gas.

 

The recent decline in the USD Index is what has given Natural Gas prices new life. The US Energy Information Administration's (EIA) inventory data, which is released every Thursday, will dominate this week's trading in Natural Gas futures.

 

Going forward, investors eagerly anticipate the publication of US inflation data in order to form a new consensus. According to the projections, the headline CPI could fall to 6.0% from the previous release of 6.4%. And, core inflation, which excludes crude and food prices, is anticipated to decrease slightly to 5.5% from the previous release of 5.6%.

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