Written Commentary
STOCK INDEX FUTURES
Stock Index futures advanced when the jobless claims report was released. Jobless claims in the week ended August 3 were 233,000 when 240,000 were expected.
In spite of this better than expected report, fears of recession remain and may limit the price recovery.
CURRENCY FUTURES
The U.S. dollar index was lower in the overnight trade but recovered and is now higher after the smaller than anticipated jobless claims report was released.
On Monday the greenback declined to its lowest level since mid-January. Gains are likely to be limited by the belief that a weaker U.S. economy will prompt the Federal Reserve to pivot more aggressively to accommodation.
Morning gains will likely not follow through to the upside.
There are increasing expectations that the European Central Bank will lower interest rates, including a total reduction of 90 basis points this year with a likely 50 basis point cut at its September 12 policy meeting.
In addition, there are increased probabilities that the Bank of England will lower interest rates with another interest rate reduction of 35 basis points at its November 7 policy meeting.
INTEREST RATE MARKET FUTURES
Futures were mostly higher in the overnight trade but came under pressure when the jobless claims number was reported.
The U.S. Treasury will auction 30-year bonds today.
Thomas Barkin of the Federal Reserve will speak at 2:00 PM.
There is now a 61% probability that the Federal Open Market Committee will lower its fed funds rate by 50 basis points at its September 18 meeting, and there is a 39% probability that the Fed will lower its rate by 25 basis points.
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