Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher today after substantial gains last week.
The 9:00 central time July leading indicators report is expected to show a 0.3% decline.
Futures are performing better than the news would suggest, indicating traders are looking beyond recent economic reports to some other not yet obvious bullish fundamental.
CURRENCY FUTURES
The U.S. dollar index is lower.
The euro currency advanced to the highest level in almost eight months, as expectations for a Federal Reserve interest rate cut pressured the U.S. dollar.
Traders are pricing in approximately 65 basis points of interest rate reductions from the European Central Bank this year, which implies two 25 basis point cuts and a 60% probability of a third cut.
Analysts are anticipating fewer interest rate cuts from the Bank of England compared to the Federal Reserve. Traders are anticipating 44 basis points of interest rate cuts from the BoE in 2024. There is a 39% probability of a 25 basis point reduction in September.
Japan’s core machinery orders increased 2.1% month-over-month in June, which exceeds market forecasts of a 1.1% increase.
INTEREST RATE MARKET FUTURES
Futures are mixed.
At 8:15 central time Federal Reserve Board Governor Christopher Waller will give opening remarks before the Summer Workshop on Money, Banking, Payments and Finance, hosted by the Federal Reserve Board of Governors.
Investors are looking ahead to Federal Reserve Chair Jerome Powell’s speech in Jackson Hole, Wyoming on Friday. Powell could greenlight a September Fed interest rate cut at the Jackson Hole Symposium.
There is a 74% probability that the Federal Open Market Committee will lower its that funds rate by 25 basis points at its September 18 meeting, and there is a 26% probability that the FOMC will reduce its key interest rate by 50 basis points in September.
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