Written Commentary
STOCK INDEX FUTURES
Stock index futures edged down on Wednesday ahead of economic data and worries of slowing economic growth. Futures have come under pressure in recent days as investors have turned increasingly cautious after Friday’s weak August payrolls report and uncertainty over when the Federal Reserve will taper its asset-purchase program.
Mortgage applications declined 1.9% in the week ending September 3, following a 2.4% drop in the previous period, and pushing the index to the lowest level since July, data from the Mortgage Bankers Association showed. Applications to refinance a home fell 2.8% and those to purchase a home were down 0.2%.
The 9:00 central time July Job Openings and Labor Turnover Survey (JOLTS) is expected to show 10 million.
The fundamental and technical aspects remain supportive for stock index futures.
CURRENCY FUTURES
The U.S. dollar is higher for a third day, moving away from a near one-month low hit last week.
The European Central Bank will hold its next policy meeting tomorrow. Traders are waiting to see whether the central bank will begin to scale-back its bond purchase program after data showed the euro zone inflation rate hit a 10-year high in August. ECB Governing Council member Robert Holzmann said the bank could tighten policy sooner than many analysts expect as inflationary pressures could prove to be persistent.
The Japanese yen is higher on news that the Japanese economy advanced 0.5% on quarter in the three months to June 2021, which compared with a preliminary estimate of 0.3% growth and market expectations of 0.4% growth. This followed a revised 1.1% decline in the first quarter.
INTEREST RATE MARKET FUTURES
Futures are higher at the long end of the curve.
The Treasury will auction 10-year notes today.
St. Louis Federal Reserve Bank President James Bullard today said the Fed should move forward with a plan to taper its massive asset-purchase program despite the slowdown in job growth.
The Federal Reserve will release its “Beige Book” on the economy at 1:00. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Federal Reserve district bank compiles anecdotal evidence of economic conditions from each of the 12 Federal Reserve districts. The next FOMC meeting is scheduled for September 22.
Federal Reserve speakers today are John Williams at 12:10 and Robert Kaplan at 5:00.
The 30-year Treasury bond futures remain in a two-month trading range, but are likely to ultimately break out to the upside, as the rate of growth in the global economy slows.
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