Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher, following through from yesterday’s gains.
Recent strength In stock index futures took place despite yesterday’s news that the Bureau of Labor Statistics in its annual revisions to payroll data showed the U.S. economy created 818,000 fewer jobs than reported from April 2023 to March 2024.
The main event this week will be Friday’s Federal Reserve Chair Powell’s speech at the Kansas City Federal Reserve’s annual Jackson Hole Economic Symposium. It is likely that Powell will indicate the Fed is ready to lower its fed funds rate at its September 18 meeting.
The Bureau of Labor Statistics downwardly revised employment data will likely be a topic of discussion at the Jackson Hole conference, which begins today.
Jobless claims in the week ended August 27 were 232,000 when 234,000 were expected, and the July Chicago Federal Reserve national activity index was -0.34 when -0.15 was in anticipated.
The 8:45 central time August composite PMI is estimated to be 53.3, and the 9:00 July existing home sales report is forecast to show 3.9 million.
The 10:00 August Kansas City Federal Reserve manufacturing index is expected to be -13.
CURRENCY FUTURES
The U.S. dollar index is higher today after yesterday it declined to its lowest level since December 2023.
The Confederation of British Industry’s monthly net balance of new orders improved to -22 in August 2024 from -32 in July and was above expectations of -25.
The European Central Bank and the Bank of England are expected to lower key interest rates this year.
INTEREST RATE MARKET FUTURES
Futures are lower today, giving back yesterday’s gains.
Yesterday’s release of the minutes from the July 31 Federal Open Market Committee meeting revealed “the vast majority” of members agreed that “if the data continued to come in as expected, it would likely be appropriate to ease policy at the next meeting.”
Yesterday’s Bureau of Labor Statistics revised lower employment data is an additional reason for the Federal Open Market Committee to ease credit conditions.
There is a 72% probability that the Federal Open Market Committee will lower its that funds rate by 25 basis points at its September 18 meeting, and there is a 28% probability that the FOMC will reduce its key interest rate by 50 basis points in September.
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