Written Commentary
STOCK INDEX FUTURES
Stock index futures advanced after the 7:30 central time economic reports were released, even though the data on balance suggests the Federal Reserve may be slightly less aggressive when it pivots to accommodation.
Retail sales in July increased 1.0% when up 0.3% was expected.
Jobless claims in the week ended August 10 were 227,000 when 234,000 were anticipated.
The August Philadelphia Federal Reserve manufacturing index was negative 7.0 when 5.8 was forecast.
Import prices in July were up 0.1% when a 0.1% decline was estimated, and export prices increased 0.7% when down 0.1% was expected.
Industrial production in July was down 0.6% when a decline of 0.1% was forecast, and the capacity utilization rate was 77.8% when 78.6% was anticipated.
The 9:00 central time August housing market index is forecast to be 42.
Futures are performing better than the news would suggest, indicating traders are looking beyond today’s economic reports to some other not yet bullish obvious fundamental.
CURRENCY FUTURES
The U.S. dollar index advanced when the stronger than expected retail sales report was released.
The fundamentals for the greenback were bearish in late July and into mid-August, and prices trended lower. However, the fundamentals are now turning neutral for the U.S. dollar.
The U.K. economy expanded 0.6% quarter-on-quarter in the second quarter, which was in line with forecasts.
Japan’s gross domestic product expanded 0.8% quarter-on-quarter in the second quarter, which is above forecasts of 0.5% growth.
Australia’s seasonally adjusted unemployment rate moved up to 4.2% in July, which was the highest jobless rate since January 2022.
INTEREST RATE MARKET FUTURES
After four consecutive days of higher prices for the 30-year Treasury bond futures, prices came under pressure when the July retail sales report was released.
Yesterday Alanta Federal Reserve Bank president Raphael Bostic said he is open to a rate cut in September as inflation cools.
Federal Reserve speakers today are Alberto Musalem at 8:10 and Patrick Harker at 12:10 PM.
There is now a 75% 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 25% probability that the FOMC will reduce its key rate by 50 basis points in September..
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