Written Commentary
INTEREST RATE MARKET FUTURES
Federal Reserve speakers today are Neel Kashkari at 12:50, Raphael Bostic at 5:00 and Alberto Musalem at 5:30.
It is widely expected that the Federal Open Market Committee will reduce its key interest rate again at its November meeting. However, the Federal Reserve may less aggressively lower its fed funds rate.
Currently there is an 89% probability that the FOMC will lower its fed funds rate by 25 basis points at its November 7 policy meeting, and there is an 11% chance that the FOMC will keep its key interest rate unchanged at 4.75% – 5.00%.
Futures are lower across the board today. However, futures at the short end of the yield curve are likely to outperform futures at the long end of the yield curve since the Federal Reserve is anticipated to continue its accommodative policies well into 2025.
STOCK INDEX FUTURES
After Friday’s strong gains, stock index futures are lower today.
The 2:00 central time August consumer credit report is expected to show a $12 billion increase.
Traders are looking ahead to this week’s inflation reports. The September consumer price index report will be released on Thursday and is anticipated to show a 0.1% increase, and the September producer price index report will be released on Friday and is estimated to show a 0.2% advance.
CURRENCY FUTURES
On Friday the U.S. dollar index advanced to its highest level since August 16. However, prices are a little lower today.
Last Tuesday the U.S. dollar index broke out above a downtrend line that started in July.
Factory orders in Germany shrank 5.8% month-to-month in August, which compares with market forecasts of a 2.0% decline and after upwardly revised 3.9% growth in July. This was the steepest decline since January.
Retail sales in the euro area increased 0.2% from a month earlier in August, after a revised unchanged reading in July, and was in line with market expectations.
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