Written Commentary
STOCK INDEX FUTURES
Stock index futures advanced due to lower overnight Treasury yields.
Recent comments from Federal Reserve officials were a bit less hawkish.
August personal income increased 0.4% as expected, and personal expenditures were up 0.4% when a gain of 0.5% was anticipated.
The 8:45 central time September Chicago PMI is predicted to be 47.9, and the 9:00 September consumer sentiment index is estimated to be 67.7.
CURRENCY FUTURES
On Wednesday the U.S. dollar index advanced above a steep uptrend line which was a sign of an overextended move. Some of the selling in the greenback today is linked to the overnight downtick in Treasury yields.
The inflation rate in the euro area declined to 4.3% year-on-year in September 2023, hitting its lowest level since October 2021 and falling under the market consensus of 4.5%.
German retail sales unexpectedly fell by 1.2% month-over-month in August 2023, missing market predictions of a 0.5% growth and following an upwardly revised unchanged reading in the previous month. This was the steepest decline in the retail trade since December 2022.
Japan’s 10-year government bond yield remained near ten-year highs above 0.75% even after the Bank of Japan intervened in the market to bring down yields. The central bank bought 300 billion yen worth of bonds with maturities between 5 and 10 years.
INTEREST RATE MARKET FUTURES
Futures are higher today.
The yield on U.S. Treasuries retreated, after one Fed official said it is too early to know if another interest rate increase would be needed this year, while another said the central bank was at risk of overshooting on interest rates.
John Williams of the Federal Reserve will speak at 11:45.
Financial futures markets are predicting there is an 88% probability that the Federal Open Market Committee will keep its fed funds rate unchanged and a 12% probability of a 25 basis point increase at its November 1 policy meeting.
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