Written Commentary
STOCK INDEX FUTURES
Stock index futures are mostly lower and remain in a broad five-day trading range.
There are no major economic reports scheduled for today.
Currently the bearish influence of prospects of a recessionary environment are being offset by expectations that the Federal Reserve will pivot to accommodation in September.
CURRENCY FUTURES
The U.S. dollar index is steady today after on Monday the greenback declined to its lowest level since mid-January. Gains are likely to be limited by the belief that a weaker U.S. economy will prompt the Federal Reserve to pivot more aggressively to accommodation.
Longer term, the U.S. dollar will probably trend lower.
The German annual inflation rate increased to 2.3% in July from 2.2% in June.
There are increasing expectations that the European Central Bank will lower interest rates at its September 12 policy meeting.
The Swiss franc is higher on news that Swiss consumer sentiment is higher than a year ago.
There are increased probabilities that the Bank of England will lower interest rates with another interest rate reduction at its November 7 policy meeting.
INTEREST RATE MARKET FUTURES
Futures are steady at the front of the yield curve and are higher at mid-curve and at the long end of the curve.
Boston Federal Reserve Bank President Susan Collins today said it will be appropriate to ease credit conditions soon if data aligns with expectations.
There is now a 54% probability that the Federal Open Market Committee will lower its fed funds rate by 50 basis points at its September 18 meeting, and there is a 46% probability that the Fed will lower its rate by 25 basis points.
Higher prices are likely for the interest rate market futures longer term.
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