Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower today after sharp gains yesterday.
Housing starts in July were 1.238 million when 1.342 million were expected on an annualized basis, and annualized building permits were 1.396 million when 1.430 million were anticipated.
The 9:00 central time August consumer sentiment index is predicted to be 67.0.
S&P 500 futures rebounded over 6.0% since August 5. Paradoxically, this advance took place at a time when prospects of a Federal Reserve pivoting more aggressively to accommodation have diminished.
Futures are performing better than the news would suggest, indicating traders are looking beyond recent economic reports to some other not yet obvious bullish fundamental.
CURRENCY FUTURES
The U.S. dollar index declined in the overnight trade with follow through pressure when the weak U.S. housing starts 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.
Industrial production in Switzerland advanced 7.3% year-on-year in the second quarter of 2024, rebounding sharply from a downwardly revised 2.0% decline in the previous quarter.
Retail sales in the U.K. in July increased 0.5% on a month-to-month basis.
INTEREST RATE MARKET FUTURES
Futures firmed when the weaker than anticipated housing starts report was released.
Chicago Federal Reserve Bank president Austan Goolsbee said, “you don’t want to tighten any longer than you have too.”
There is now a 71% 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 29% probability that the FOMC will reduce its key rate by 50 basis points in September.
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