Written Commentary
STOCK INDEX FUTURES
Stock index futures were mostly lower in the overnight trade due to weaker than expected corporate earnings reports, and after recent hawkish comments from Federal Reserve officials.
However, there has been a partial recovery after the weaker than expected U.S. gross domestic product report was released, which was up 1.3% on an annualized basis when a gain of 1.5% was expected. In addition, personal consumption expenditures on an annualized basis increased 2.0% when up 2.2% was anticipated.
Jobless claims in the week ended May 25 were 219,000 when 217,000 were predicted.
In spite of lower prices over the past few days, the longer term fundamentals and technicals remain supportive.
INTEREST RATE MARKET FUTURES
Yesterday’s release of the Federal Reserve’s Beige Book showed most regions experienced slight or modest growth.
Federal Reserve speakers today are John Williams at 11:05 and Lorie Logan at 4:00.
Recent pressure on futures was due to weak demand for 2-,5-, and 7-year note auctions and hawkish comments from Fed officials.
However, futures are higher today in light of the bullish gross domestic product report.
Financial futures markets are predicting there is a 51% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
CURRENCY FUTURES
The U.S. dollar index was lower in the overnight trade, tracking declines in U.S. Treasury yields. There was additional pressure on the greenback when the weaker than estimated U.S. gross domestic product report was released.
The economic sentiment indicator in the euro area increased to 96 points in May 2024, which was the highest in four months, compared to 95.6 in April, but is slightly under forecasts of 96.2.
The unemployment rate in the euro zone fell to a record low in April. The unemployment rate ticked down to 6.4% from 6.5% where it had been since November of last year, according to the European Union’s statistics agency. Economists expected the rate to remain unchanged. In addition, the number of unemployed workers declined by approximately 100,000 from March.
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