Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are lower due to concerns about the recovery in the global economy.
Jobless claims in the week ended July 11 were 1,300,000 million when 1,288,000 million were expected.
Retail sales in June were up 7.5% when a gain of 5.2% was anticipated and the July Philadelphia Federal Reserve business outlook index was 24.1, which compares to the estimate of 20.0.
The 9:00 May business inventories report is predicted to be down 2.3% and the 9:00 July housing market index is expected to be 60.
At least a partial recovery is likely for stock index futures from the morning lower prices.
CURRENCY FUTURES
Flight to quality buying is supporting the U.S. dollar.
The European Central Bank left its monetary stimulus unchanged. The ECB said in a statement that it would continue to purchase 1.35 trillion euros of government and corporate debt through June 2021 under its Pandemic Emergency Purchase Program. In addition, the bank left its key interest rate unchanged at minus 0.5%.
The European Union summit will be held on July 17-18 where leaders need to bridge the gaps on a long-term budget. Investors will also watch whether an agreement on a proposed 750 billion euro recovery fund emerges.
The British pound is lower despite better than expected U.K. employment numbers.
The rate of decline in the U.K. jobs market is slowing. The claimant count measure of unemployment fell by 28,100 in June rather than increasing by the 250,000 that was expected by analysts.
The Bank of Canada held its policy meeting yesterday and indicated that it anticipated no rate hikes until 2023.
INTEREST RATE MARKET FUTURES
The yield on the 10-year Treasury note fell to 0.623% from 0.629% yesterday.
Federal Reserve speakers today are John Williams at 10:10, Raphael Bostic at 11:00, Charles Evans at 12:30 and Raphael Bostic at 1:00.
According to financial futures markets there is a 95.6% probability that the Federal Open Market Committee will leave its fed funds rate unchanged at zero to 25 basis points at its July 29 policy meeting.
Futures appear to be caught between the bearish influence of more government stimulus and the bullish influence of ongoing historically accommodative central bank policies.
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