Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures advanced despite the stalemate in Washington over a fresh round of economic stimulus, along with ongoing tensions between the U.S. and China.
The August Empire State manufacturing index was 3.7 when 17 was expected.
The 9:00 central time August housing market index is anticipated to be 72.
The September S&P 500 futures are not very far away from the record high at 3396.50.
CURRENCY FUTURES
The U.S. dollar is lower, as hedge funds are short the greenback for the first time since May 2018, according to the Commodity Futures Trading Commission.
Some of the bears on the U.S. dollar are speculating that the Federal Reserve may loosen its approach to inflation, which could happen at its next policy meeting in September.
The U.S. dollar is likely to drift lower from current levels.
The British pound is lower after a report showed U.K. household finances took a turn for the worse. The financial health of British households deteriorated in August at a faster pace than in the previous month. The Household Finance Index from data company IHS Markit declined to 40.8 in August from 41.5 in July.
The Japanese yen is higher after a report showed Japan’s gross domestic product fell 7.8% in the second quarter of 2020 compared with the previous quarter. The result was in line with expectations.
INTEREST RATE MARKET FUTURES
The yield on 10-year Treasury notes edged lower to 0.696% from 0.708% Friday.
Interest rate market futures, especially at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep interest rates low for an extended period.
The next Federal Open Market Committee meeting is scheduled for September 16. Financial futures markets are predicting there is a 92% probability that the FOMC will maintain its fed funds target rate at zero to 25 basis points.
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