Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are lower after the International Monetary Fund said the global economic outlook remains difficult and prone to setbacks.
Jobless claims in the week ended November 14 were 742,000 when 710,000 were expected.
The November Philadelphia Federal Reserve manufacturing index was 26.3 when 24.5 was anticipated.
The 9:00 central time October existing home sales report is estimated to show 6.47 million and the 9:00 October leading indicators report is predicted to show a 0.7%. increase.
The 10:00 November Kansas City Federal Reserve manufacturing index is predicted to be 18.
Overall, stock index futures are performing well on the news.
CURRENCY FUTURES
The U.S. dollar is higher today after declining for five consecutive days.
Longer term, the U.S. dollar is likely to drift lower due to expectations for an extended period of low interest rates and concerns over rising U.S. levels of debt.
The euro currency is lower after a report showed euro zone construction output fell back into contraction territory in September.
The British pound is lower after the Confederation of British Industry’s order book balance fell 6 points to -40 in November, which is slightly worse than market expectations of -39.
Negotiations over a post-Brexit trade deal with the E.U. continue in Brussels.
INTEREST RATE MARKET FUTURES
Federal Reserve Bank of New York President John Williams yesterday said that if elected leaders do not deliver new support for the economy, the path of the recovery will probably be slower than if help were provided.
Mr. Williams said fiscal aid has “been a critical part of why the economy has recovered as well as it has.”
In separate comments Wednesday, Thomas Barkin of the Richmond Federal Reserve, said when it comes to the kinds of stimulus the Federal Reserve can provide to the economy, “our powers are limited. And they are focused on either rates and asset purchases, and in some of these emergency backstop facilities.”
Michelle Bowman of the Federal Reserve will speak at 11:35.
Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at the December 16 policy meeting.
In the months ahead the yield curve is likely to steepen, which should put pressure on futures at the long end of the curve, especially the 30-year Treasury bond futures, while futures at the short end of the curve are likely to hold steady.
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