Written Commentary
STOCK INDEX FUTURES
Global equity prices are mostly higher after a large country in Asia reduced interest rates and reserve ratio requirements. U.S. equity market futures are no exception and are trading higher across the board.
The 9:00 central time September consumer confidence index is expected to be 103.0, and the September Richmond Federal Reserve manufacturing index is anticipated to be -17.
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 is holding up well even though it appears likely that the Federal Open Market Committee will more aggressively lower its fed funds rate this year.
The Ifo Business Climate indicator for Germany declined to 85.4 in September 2024 from 86.6 in August. This was the lowest reading since January and missed economists’ expectations of 86.
The Swiss National Bank will hold its policy meeting on September 26. The market consensus is for a 25 basis-point reduction in its key interest rate from 1.25% to 1.00%.
Japan’s factory activity eased in September. The au Jibun Bank flash Japan manufacturing purchasing managers’ index declined to 49.6 in September from 49.8 in August.
The Reserve Bank of Australia maintained its cash rate at 4.35% at its policy meeting today, as expected.
INTEREST RATE MARKET FUTURES
U.S. Treasury will auction two-year notes today.
It is widely expected that the FOMC will reduce its key interest rate again at its November meeting. Currently there is a 49% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its November 7 policy meeting, and there is a 51% chance that the FOMC will reduce its key rate by 50 basis points.
The main trend for futures is higher, especially for futures at the short end of the curve, in light of increasing prospects of a more aggressive move to accommodation from the FOMC.
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