Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher in advance of Federal Reserve Chair Powell’s 9:00 central time speech at the Kansas City Federal Reserve’s annual Jackson Hole Economic Symposium.
Powell is widely expected to signal support for cutting interest rates at its September meeting.
The 9:00 July new home sales report is expected to show 628,000.
Futures are performing better than the news would suggest.
CURRENCY FUTURES
The U.S. dollar index is lower today after earlier this week it declined to its lowest level since December 2023.
Median expectations for inflation over the next 12 months in the euro area remained unchanged at 2.8% for the third consecutive month. Median predictions for inflation three years ahead increased 0.1 percentage points in July to 2.4%.
The European Central Bank and the Bank of England are expected to lower key interest rates this year.
The Japanese yen advanced after Bank of Japan Governor Kazuo Ueda reaffirmed that the bank plans to continue increasing interest rates.
The annual inflation rate in Japan was 2.8% in July 2024, which is steady for the third consecutive month, while remaining at the highest level since February.
INTEREST RATE MARKET FUTURES
Futures are higher across the board.
There is a 74% 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 26% probability that the FOMC will reduce its key interest rate by 50 basis points in September.
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