Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures declined in the overnight trade due to increasing prospects of reduced global GDP growth.
In addition, Federal Reserve Chairman Jerome Powell released his prepared remarks for his testimony on the Coronavirus and Cares Act before the Senate Banking Committee. Mr. Powell said Inflation is elevated and will likely remain so in coming months before moderating.
Mr. Powell is scheduled to testify before the Senate Banking Committee at 9:00 central time.
August wholesale inventories increased 1.2% when up 0.4% was expected.
The 9:00 September consumer confidence index report is anticipated to be 114.8 and the 9:00 September Richmond Federal Reserve manufacturing index is predicted to be 9.
Despite lower prices today, the longer-term fundamental and technical aspects remain supportive for stock index futures.
CURRENCY FUTURES
The U.S. dollar index advanced to a six-week high, as higher U.S. Treasury yields made the dollar more attractive to investors.
U.S. Treasury yields have increased since the end of last week, after the Federal Reserve said it will likely begin reducing its monthly bond purchases as early as November.
In addition, there is some flight to quality buying coming into the greenback.
The euro is lower despite news that The GfK Consumer Climate Indicator in Germany increased to 0.3 heading into October from -1.1 in September and beating estimates of -1.6. This is the highest reading since April of 2020.
INTEREST RATE MARKET FUTURES
Futures at the long end of the curve declined, as U.S. government bond yields hit their highest level in three months.
Traders continue to weigh prospects that the Fed will soon taper its $120 billion a month in asset purchases.
Federal Reserve Governor Lael Brainard said the labor market may soon meet her target for tapering to start, while New York Fed Bank President John Williams said moderating bond-buying may soon be warranted.
In addition to Fed Chair Powell, other Fed speakers today are Charles Evans at 8:00, James Bullard at 12:40, Raphael Bostic at 2:00 and James Bullard at 6:00.
The Treasury will auction seven-year notes.
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