Written Commentary
CURRENCY FUTURES
The U.S. dollar index is higher and is trading at the highest level since November of 2022.
The fundamentals and technicals remain supportive to the U.S. dollar and are bearish for the euro currency.
The euro currency declined to its lowest level since November 2022, following the release of PMI data revealing ongoing weakness in euro zone business activity. The HCOB flash euro zone composite PMI dropped to 48.1 in November from 50 in October, which is significantly under the anticipated 50.
There are expectations that the European Central Bank will lower its key interest rates more aggressively than the Federal Reserve, which is likely to put additional pressure on the euro.
Retail sales in the U.K. declined 0.7% month-over-month in October 2024, following a downwardly revised 0.1% increase in September, and was much worse than predictions of a 0.3% decline.
The U.K. PMI declined to 49.9, which ends 12 months of growth as private sector activity contracts for the first time since October 2023.
The annual inflation rate in Japan fell to 2.3% in October 2024 from 2.5% in the previous month, which marks the lowest reading since January.
STOCK INDEX FUTURES
Stock index futures are mixed.
The 8:45 central time November purchasing managers manufacturing index is expected to be 48.8, and the services index is anticipated to be 55.1.
The 9:00 November consumer sentiment index is estimated to be 73.0.
The long term fundamentals and technicals remain supportive to stock index futures.
Stock index futures are mixed.
The 8:45 central time November purchasing managers manufacturing index is expected to be 48.8, and the services index is anticipated to be 55.1.
The 9:00 November consumer sentiment index is estimated to be 73.0.
The long term fundamentals and technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are higher.
Yesterday Federal Reserve Bank of Chicago President Austan Goolsbee said it feels like we are heading to 2.0% inflation.
Federal Reserve Board Governor Michelle Bowman will speak at 5:15 PM today on artificial intelligence before the 27th Annual Symposium on Building the Financial System of the 21st Century.
Bowman is not as dovish as some of her colleagues at the Federal Reserve, having dissented at the September 18 Federal Open Market Committee policy meeting. She was opposed to the Committee’s decision to reduce the target range for the fed funds rate by 50 basis points, preferring a smaller 25 basis point reduction.
There is a 59% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its December 18 policy meeting, and there is a 41% chance of the FOMC keeping rates unchanged at 4.50% – 4.75%.
It is likely that the FOMC will be slower to add accommodation in 2025 than the consensus view.
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