U.S. stock futures edge higher.
U.S. stock index futures edged higher Monday as investors weighed the prospect of lower U.S. interest rates against growing concerns over a cooling labor market ahead of the release of key inflation data.
At 05:45 ET (09:45 GMT), Dow Jones Futures rose 65 points, or 0.1%, S&P 500 Futures gained 14 points, or 0.2%, and Nasdaq 100 Futures climbed 80 points, or 0.3%.
The main averages on Wall Street retreated on Friday, following the release of a softer-than-anticipated August nonfarm payrolls which underlined an ongoing slowdown in the American labor market.
Still, the figures all but cemented expectations that the Fed will slash rates by at least 25 basis points at its September 16-17 policy gathering, and even bolstered the case for a half-point reduction from the current range of 4.25% to 4.5%.
Fed fund futures prices showed markets pricing in a 91.7% chance the Fed will cut rates by 25 basis points next week, while also pricing in a 8.3% chance for a 50 bps cut, CME Fedwatch showed.
Despite the decline at the end of the prior week, the benchmark S&P 500 remains not far from a record peak notched on Thursday.
Crude gains after OPEC+ meeting .
Oil prices surged higher after the OPEC+ production group agreed to raise output at a substantially smaller pace than that seen earlier this year.
At 05:45 ET, Brent futures gained 2% to $66.79 a barrel, and U.S. West Texas Intermediate crude futures rose 2% to $63.13 a barrel.
The Organization of Petroleum Exporting Countries and allies, known as OPEC+, agreed on Sunday to raise production by a cumulative 137,000 barrels per day in October, much lower than monthly hikes of about 555,000 bpd and 411,000 bpd in earlier months.
The cartel’s latest hike comes after it began steadily raising production earlier this year, as leader Saudi Arabia sought to regain market share to offset deteriorating oil prices.
The dollar bear market isn’t over.
The dollar’s recent resilience should not be mistaken for the end of its downturn, according to Morgan Stanley, which argues that the U.S. currency’s bear market still has further to run.
Despite a slide in front-end Treasury yields and political noise around the Federal Reserve, the greenback has held steady.
Some investors see this as a sign that the dollar’s decline has already played out, supported by U.S. equities outperforming global peers and the perception that the American economy can absorb import tariffs more easily than others.
Yet Morgan Stanley strategist James K. Lord opposes that view.
“We are not convinced that the dollar’s downtrend has run its course – on the contrary, we think its decline is barely halfway through,” he said in a Sunday note.
The bank’s economics team expects U.S. GDP growth to slow to around 1% by the fourth quarter of 2025 and stay only slightly higher in 2026, levels that hardly signal outperformance relative to the rest of the world.
A weaker labor market adds to the downside risks. Lower growth, coupled with the Fed’s readiness to tolerate inflation above target, could push real yields lower. Historically, that has been a headwind for the dollar.
Morgan Stanley’s rates team remains positioned for further easing, holding a long in the five-year Treasury note on expectations that the front end of the curve could price a deeper cycle.
This could reinforce dollar weakness by encouraging foreign investors to hedge their U.S. assets.
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