E-mini S&P 500
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E-mini Nasdaq-100 (NQ) Futures: Slow-paced Interest Rates Hikes Possible?

  • Job vacancies in the US decreased in August.
  • The RBA is the first central bank to slow its rate hikes.
  • Markets are hoping the Fed will follow in the RBA’s path.

the E-mini Nasdaq-100 (NQ) futures prices are climbing after softer US economic data and Australia’s smaller-than-expected interest rate hike sparked optimism for less aggressive Federal Reserve tightening.

Although there is still a healthy labor market, the number of job vacancies in the United States decreased by the highest in almost 2-1/2 years in August. It indicates that the Fed’s efforts to slow the economy by raising interest rates are having the desired effect. 

“The Fed will welcome this apparent decline in excess demand for labor in the hope that it eases wage pressures,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.

US job openings, unemployment & wage growth (Source: Refinitiv Datastream)
US job openings, unemployment & wage growth (Source: Refinitiv Datastream)

The number of available jobs decreased, and the unemployment rate rose from 3.5% in July to 3.7%. The job-worker gap decreased from 3.4% in July to 2.5% of the labor force, or 4.0 million people, which might slow wage increases.

The Reserve Bank of Australia stunned the markets by raising interest rates by 25 basis points, less than what markets had anticipated. Its cash rate reached a nine-year high following six rate increases during a tightening cycle that other central banks are also experiencing.

“The RBA is the first major central bank to recognize that now is the time to slow down after aggressively raising rates this year,” said Anthony Saglimbeni, chief market strategist at Ameriprise Financial in Troy, Michigan.

“There’s hope that the Federal Reserve will say the same thing sometime in the fourth quarter. Not stop raising interest rates, but just slow the pace,” he said. “That’s what the market’s rallying on below the surface.”

A less aggressive Fed would be the beginning and end of the E-mini Nasdaq-100 (NQ) bear market.

The dollar saw its longest losing streak against a basket of currencies since August 2021 as investors started to price in the potential that tighter lending conditions could cause the Federal Reserve to act more cautiously. The monthly US jobs report, released on Friday, is a key piece of information that will show whether rate hikes have started to hurt the economy.