Written Commentary
STOCK INDEX FUTURES
Dow Jones futures advanced to new record highs yesterday.
Stock index futures are higher today despite the neutral to slightly bearish interest rate implications of today’s personal income report.
Personal income in July increased 0.3% when up 0.2% was expected, and personal consumption expenditures in July increased 0.5% as forecast.
The 8:45 central time August Chicago PMI is estimated to be 46.4.
The 9:00 August consumer sentiment index is forecast to be 67.9.
S&P 500 futures advanced above a downtrend line yesterday and remain above that breakout point this morning.
Futures have performed better than the news would suggest this month, which indicates traders are looking beyond recent economic reports to some other not yet obvious bullish fundamental.
CURRENCY FUTURES
The U.S. dollar index is higher after the neutral to slightly bullish U.S. personal income report.
Euro zone inflation declined to its lowest level in three years, pointing to a European Central Bank interest rate reduction in September.
Euro zone consumer price growth slowed to 2.2% in August on an annual basis from 2.6% July, moving closer to the ECB’s 2.0% target. And core inflation, which excludes volatile food and energy, edged lower to 2.8% from 2.9% a month earlier. Both metrics are in line with expectations.
The euro zone unemployment rate in July was 6.4% when 6.5% was expected.
U.K. house prices unexpectedly declined 0.2% in August for the first monthly drop since April, according to a major mortgage lender. Economists had forecast prices would increase by 0.2% from July.
Core inflation in Japan’s capital accelerated for a fourth consecutive month in August. The Tokyo core consumer price index, which excludes volatile fresh food costs, increased 2.4% in August from a year ago. The median market forecast of 2.2%.
INTEREST RATE MARKET FUTURES
Futures are marginally lower after the neutral to slightly bearish personal income report was released.
There are no Federal Reserve speakers scheduled for today.
There is a 70% probability that the Federal Open Market Committee will lower its funds rate by 25 basis points at its September 18 meeting, and there is a 30% probability that the FOMC will reduce its key interest rate by 50 basis points in September.
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