Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower.
Futures remain in an eight-day congestion pattern, and an upside breakout is likely.
There are no major economic reports scheduled for today.
Futures have performed better than the news would suggest in August, which indicates traders are looking beyond recent economic reports to some other not yet obvious bullish fundamental.
CURRENCY FUTURES
After hitting the lowest level since last December, the U.S. dollar index is higher today.
Today’s gains in the greenback may be mostly technical in nature as a steep downtrend line has been taken out on the upside.
With the exception of today, the U.S. dollar index has trended lower since July due to expectations that the Federal Reserve will start lowering interest rates soon.
German consumer sentiment continues to weaken. A forward-looking consumer-climate index declined to -22.0 points for September, and is weaker than the consensus estimate of -18.4.
Bank lending to households in the euro zone increased by 0.5% year-on-year in July 2024, as expected, accelerating from a 0.3% advance in June.
Australian inflation slowed to a four-month low in July, which caused traders to pare back the probability of a near-term cut in interest rates.
Bank of Japan Deputy Governor Ryozo Himino said the central bank will raise interest rates as long as inflation moves in line with the bank’s view.
Australia’s consumer price index in July increased at an annual pace of 3.5% , which is down from 3.8% in June and was slightly above forecasts of 3.4%.
INTEREST RATE MARKET FUTURES
Futures are mostly higher.
Raphael Bostic of the Federal Reserve will speak at 5:00 PM.
The U.S. Treasury will auction five-year notes today.
There is a 66% probability that the Federal Open Market Committee will lower its funds rate by 25 basis points at its September 18 meeting, and there is a 34% probability that the FOMC will reduce its key interest rate by 50 basis points in September.
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