Written Commentary
STOCK INDEX FUTURES
Yesterday’s sharp advance for stock index futures took place after the very weak 9:00 central time economic reports were released.
Yesterday’s August consumer confidence index was 106.1 when 116.5 was expected, and the July Job Openings and Labor Turnover Survey (JOLTS) was only 8.827 million when 9.559 million were anticipated, which was a 28-month low.
Today’s August Automated Data Processing, Inc. employment report showed an increase of 177,00 when up 200,000 was predicted.
The second quarter gross domestic product report showed an increase of 2.1% when up 2.4% was estimated, and personal consumption expenditures increased 1.7% as expected.
The 9:00 July pending home sales report is predicted to be down 0.4%.
CURRENCY FUTURES
The U.S. dollar index declined yesterday after the weak U.S. economic reports were released.
In spite of this, the greenback is likely to trend higher since the U.S. economy appears to be holding up relatively well compared to economies elsewhere.
German import prices decreased by 13.2% year-on-year in July 2023, marking the sharpest drop since January 1987 and compared to market predictions of a 12.9% decline.
The German European Union-harmonized August consumer price index increased 0.4% on the month when a gain of 0.3% was forecast.
The consumer confidence index in Japan unexpectedly declined to 36.2, which is below market forecasts of 37.5.
Australia’s inflation slowed to a 17-month low in July.
Data from the Australian Bureau of Statistics showed its monthly consumer price index increased 4.9% on the year to July, which is down from 5.4% in the previous month and under market predictions of 5.2%.
INTEREST RATE MARKET FUTURES
Futures are mixed.
Financial futures markets are now predicting there is an 89% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is an 11% probability of a 25 basis point increase.
Before yesterday’s weak economic reports there was a 21% chance of a rate hike next month.
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