Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher with much of the strength linked to prospects of a Federal Reserve pivot to accommodation.
Retail sales in August increased 0.1% when a decline of 0.3% was expected.
August industrial production increased 0.8% when up 0.1% was predicted, and capacity utilization was 78.0% when 77.9% was estimated.
The 9:00 central time September housing market index is predicted to be 40, and the July business inventories report is forecast to show a 0.4% increase.
Stock index futures have recently performed better than the news would suggest, which should be viewed as a sign of strength.
CURRENCY FUTURES
The U.S. dollar index was lower in the overnight trade. However, there was some support for the greenback when the U.S. retail sales report was released.
Follow-through gains are unlikely ahead of tomorrow’s widely predicted Federal Reserve decision to lower its key interest rate.
German economic sentiment weakened again In September. The ZEW Indicator of Economic Sentiment, which tracks economic expectations for the next six months, declined 15.6 points on the month to 3.6, which is substantially under expectations of 15.5.
The Bank of England will hold its policy meeting on September 19. After cutting rates in August, it is widely expected that the BOE’s Monetary Policy Committee will maintain the base rate at 5.0%.
The Bank of Japan will hold its policy meeting on September 20. The central bank will probably keep its short-term interest rate at the current level of 25 basis points.
INTEREST RATE MARKET FUTURES
There was some selling when the U.S. retail sales report was released.
The Treasury will auction 20-year bonds today.
The Federal Reserve is widely anticipated to reduce interest rates this week for the first time since March 2020.
Currently there is a 67% probability that the Federal Open Market Committee will lower its funds rate by 50 basis points at its September 18 meeting, and there is a 33% probability that the FOMC will reduce its key interest rate by 25 basis points.
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