Written Commentary
STOCK INDEX FUTURES
Futures are mixed, although NASDAQ futures today advanced to new record highs.
The June Empire State manufacturing index was -6.0 when -10.5 was expected.
The longer term fundamentals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is higher and is hovering near its highest levels since early May. The greenback continues to benefit from a sharp depreciation in the euro currency in light of the political turmoil in Europe.
Wages in the euro zone increased 5.3% year-on-year in the first quarter of 2024, which is the biggest advance since the last quarter of 2022.
Japan’s core machinery orders declined in April for the first time in three months. Core orders fell 2.9% month-on-month in April, compared to the 3.1% decline expected by economists.
The Reserve Bank of Australia is expected to keep its benchmark interest rate unchanged at the conclusion of its two day policy meeting on Tuesday.
INTEREST RATE MARKET FUTURES
On Friday the September 30-year U.S. Treasury bond futures advanced to the highest level since March 12.
However, futures are lower today after Minneapolis Federal Reserve Bank President Neel Kashkari reaffirmed on Sunday, that it was a “reasonable prediction” to expect a single rate cut this year.
Patrick Harker of the Federal Reserve will speak at 12:00 central time.
Financial futures markets are predicting there is a 65% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
The long term fundamentals are bullish on balance, especially for the 30-year U.S. Treasury bond futures.
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