Written Commentary
STOCK INDEX FUTURES
Stock index futures advanced yesterday after Federal Reserve Chairman Jerome Powell told members of the House Financial Services Committee that inflation will moderate and that the central bank plans to maintain its current ultra-low interest rate policies.
Mr. Powell is set to testify to members of the Senate Banking Committee today at 8:30 central time.
Jobless claims in the week ended July 10 were 360,000 when 368,000 were expected.
The July Philadelphia Federal Reserve manufacturing index was 21.9, which compares to the anticipated 28.5.
The July Empire State manufacturing index was 43 when 18.3 was predicted.
Import prices in June increased 1.0% when a gain of 1.2% was estimated and export prices increased 1.2% when up 1.3% was expected.
June industrial production was up 0.4% when an increase of 0.7% was anticipated and capacity utilization was 75.4% when 75.6% was predicted.
The technical aspects for stock index futures remain positive.
CURRENCY FUTURES
The U.S. dollar index is higher today, after falling yesterday in response to Fed Chair Powell’s dovish testimony. Flight to quality buying has recently supported the greenback.
The unemployment rate in the U.K. edged up to 4.8% in the three months to May of 2021, compared to market forecasts of 4.7%.
Australia’s unemployment rate declined to its lowest level since 2010. The unemployment rate fell to 4.9% in June from 5.1% in May, according to the Australian Bureau of Statistics. Economists had expected a jobless rate of 5.1% in June.
INTEREST RATE MARKET FUTURES
The 30-year Treasury bond futures are higher as investors digest yesterday’s dovish comments from Fed Chair Powell when he said the central bank is not even close to tightening and that inflation will remain high for some months before moderating.
In addition to Powell, Charles Evans of the Fed will speak at 10:00.
Substantial gains in the 30-year Treasury bond futures since May and a flattening yield curve suggests the rate of inflation may be peaking.
It is a sign of strength for futures, especially for the 30-year Treasury bond futures, to be so strong after yesterday’s bearish PPI report.
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