Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are mixed.
Durable goods in August increased 1.8% when an increase of 0.6% was expected.
The 9:30 central time September Dallas Federal Reserve manufacturing survey is anticipated to be 11.0.
The bears on this market point to the near-term prospects of central banks pulling back stimulus, the default of a major overseas real estate company, concerns about the pace of the global economic recovery and the ongoing debates over the debt limit in Washington.
On the bullish side is the historically low fed funds rate of zero to 25 basis points.
Overall, stock index futures continue to perform well for the news with S&P 500 futures trading above a downtrend line that began earlier this month.
CURRENCY FUTURES
There is some flight to quality buying coming into the U.S. dollar index. In addition, the greenback was supported last week when the Fed signaled it could start reducing asset purchases as soon as November while lowering growth forecasts and raising inflation projections.
New Loans to households in the euro area increased 4.2% in August 2021, which is unchanged from the previous month’s increase. Credit to companies was up 1.5%, compared with 1.7% in July and matching the smallest increase in corporate lending since April 2016.
The British pound is higher, moving away from a one-month low hit last week, following the Bank of England’s hawkish tone on monetary policy. The central bank increased its forecast for inflation and two of its policymakers called for an immediate halt to the £895 billion bond purchase program.
INTEREST RATE MARKET FUTURES
Futures at the long end of the curve are lower after Federal Reserve Bank of Chicago leader Charles Evans said today he is on board with an imminent pullback in the central bank’s bond buying stimulus effort. Mr. Evans said, “I see the economy as being close to meeting the substantial further progress standard we laid out last December as the bar for beginning to taper our asset purchases.”
Federal Reserve Chair Jerome Powell said last week the U.S. central bank could begin scaling back asset purchases in November and start increasing interest rates as soon as next year.
The Treasury will auction two-year and five-year notes today.
John Williams of the Federal Reserve will speak at 11:00.
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