Written Commentary
STOCK INDEX FUTURES
Stock index futures advanced due to mostly stronger than expected corporate earnings reports with NASDAQ futures advancing to a record high.
Traders are waiting for more updates on stimulus talks out of Washington. Treasury Secretary Steven Mnuchin said the goal is to strike a deal on legislation by the end of this week.
The ADP national employment change report showed employment in the U.S. private sector increased 167,000 in July when the market expectation was for a gain of 1.5 million.
The 8:45 central time July PMI services index is anticipated to be 49.6 and the 9:00 July Institute for Supply Management nonmanufacturing index is estimated be 55.
Stock index futures continue to have upside momentum.
CURRENCY FUTURES
The U.S. dollar index is under pressure today. On Monday, the greenback broke out above a downtrend line, but it is below that trendline now, which suggests Monday’s move was a false breakout.
There was additional pressure on U.S. dollar index when the weaker than expected July ADP employment report was released.
Some of the bears on the greenback are speculating that the Federal Reserve may loosen its approach to inflation, which is something analysts believe could happen at its next policy meeting in September.
The euro currency is higher on news that the euro zone July composite PMI was 54.9 when 54.8 was forecast.
The British pound is higher after a report showed U.K. service sector activity expanded at the fastest pace for five years in July.
INTEREST RATE MARKET FUTURES
Futures at the front end of the curve are being supported by ideas that major central banks, including the Federal Reserve, are likely to keep interest rates low for an extended period.
Higher prices for stock index futures pressured the long end of the curve, although there was some recovery when the weak ADP employment change report a released.
The yield on the 10-year Treasury note ticked up to 0.530% from 0.514% yesterday, which was the second lowest closing level this year.
Loretta Mester of the Federal Reserve will speak at 4:00 this afternoon.
The next Federal Open Market Committee meeting is scheduled for September 16. Financial futures markets are predicting there is a 90% probability that the FOMC will maintain its fed funds target rate at zero to 25 basis points.
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