Written Commentary
STOCK INDEX FUTURES
Mortgage applications dropped 3.7% in the week ended August 26, which is the third consecutive decline.
The national employment report from Automated Data Processing Inc. showed private sector jobs increased 132,000 in August when a gain of 225,000 was expected.
The 8:45 central time August Chicago PMI is anticipated to be 52.1.
Stock index futures are likely to have a difficult time holding gains as Federal Reserve officials are becoming more hawkish in their rhetoric.
CURRENCY FUTURES
The U.S. dollar is higher and is close to hitting 20-year highs.
The long term trend for the U.S. dollar is higher as Federal Reserve officials have become even more hawkish in their rhetoric this week.
The euro currency fell below $1.00 on Wednesday, holding close to 20-year lows.
European Central Bank Governing Council member Joachim Nagel said concerns over an economic contraction in the euro area should not derail increases in borrowing costs to counter record inflation.
INTEREST RATE MARKET FUTURES
Federal Reserve Bank of New York President John Williams said Tuesday that combating high inflation is likely to require hiking the central bank’s benchmark short-term interest rate above 3.5% and holding it at that level through next year.
This morning Cleveland Federal Reserve President Loretta Mester said she sees the benchmark rate above 4.0% and no cuts at least through 2023.
Other Federal Reserve speakers are Lorie Logan at 5:00 and Raphael Bostic at 5:30 this afternoon.
According to financial futures markets, there is a 29.5% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 70.5% probability that the rate will increase by 75 basis points at the September 21 policy meeting.
The inverted Treasury yield curve continues to flash warnings of economic risks ahead.
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