Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower to start the month even after lawmakers averted a government shutdown ensuring funding until November 17.
The 8:45 central time September PMI final is expected to be 48.9.
The 9:00 September Institute for Supply Management manufacturing index is anticipated to be 47.8, and the 9:00 August construction spending report is estimated to show a 0.5% increase.
CURRENCY FUTURES
Increasing U.S. Treasury yields supported the U.S. dollar today, although the technicals have turned negative over the last four trading days. On Thursday futures rolled under a steep uptrend line and on Friday another uptrend line was penetrated on the downside.
The euro currency is lower following the release of weak economic reports across European countries. The latest PMI surveys showed euro zone manufacturing activity remained in contraction territory last month.
HCOB’s final euro zone manufacturing Purchasing Managers’ Index fell slightly to 43.4 in September from August’s 43.5, which matched a preliminary estimate.
U.K. manufacturing activity slowed sharply in September, although less steeply than in August when it shrank at the fastest pace in over three years.
The S&P Global/CIPS manufacturing Purchasing Managers’ Index remained well under the 50 level, dividing growth from contraction, moving up to 44.3 in September from August’s 43.0, which was the lowest level since May 2020.
The Nationwide House Price Index in the U.K. dropped 5.3% year-on-year in September 2023, compared with market expectations of a 5.7% decrease.
Japan’s Tankan Large Manufacturers Index climbed to 9 in the third quarter of 2023 from 5 in the second quarter, which was better than the market consensus of 6.
INTEREST RATE MARKET FUTURES
Futures are lower as traders focus on the Federal Reserve and less on government shutdown issues.
The yield on the U.S. 10-year Treasury note climbed to above 4.64%, holding close to sixteen-year highs.
Financial futures markets are predicting there is a 72% probability that the Federal Open Market Committee will keep its fed funds rate unchanged and a 28% probability of a 25 basis point increase at its November 1 policy meeting.
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