Written Commentary
STOCK INDEX FUTURES
The House passed a short-term spending bill to avert a government shutdown. The measure now heads to the Senate where passage is likely.
Stock index futures quickly advanced when the October producer price index report was released. The October producer price index declined 0.5% when a 0.1% increase was expected on a month-to-month basis, and on a year-to-year basis increased 1.3% when up 2.0% was anticipated.
Retail sales in October fell 0.1% when down 0.3% was estimated.
The Empire State manufacturing index for November was 9.1, which compares to the predicted -3.0.
The 9:00 central time September business inventories report is forecast to show a 0.4% increase.
Yesterday S&P 500 futures broke out above a triple top formation on the daily chart.
CURRENCY FUTURES
The U.S. dollar is higher today after suffering a huge decline yesterday.
Industrial production in the euro area declined by 1.1% month-over-month in September 2023, following 0.6% growth in the previous period and surpassing the anticipated decrease of 1.0%.
The euro area economy is expected to grow by 0.6% in 2023, which is lower than the previously projected 0.8% expansion, according to the European Commission’s Autumn 2023 Economic Forecast. Additionally, the gross domestic product projection for 2024 was revised lower to 1.2% from an earlier estimate of 1.3%.
Annual consumer price inflation in the U.K. in October unexpectedly plunged to a lower-than-expected 4.6% from 6.7% in September. The increase was the smallest in two years and prompted investors to increase their expectations of Bank of England interest rate cuts next year.
The Japanese economy shrank 0.5% quarter-to-quarter in the third quarter of 2023, which is worse than market forecasts of a 0.1% decline and after 1.1% growth in the second quarter. This was the first gross domestic product contraction since the fourth quarter of 2022.
INTEREST RATE MARKET FUTURES
Federal Reserve speakers today are Michael Barr at 8:30 and Thomas Barkin at 2:30.
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 its December 13 policy meeting. On Monday there was a 14% probability of a 25 basis point increase.
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