Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are higher. Stock index futures have been able to partially recover after selling that was prompted by Wednesday’s less dovish that expected Federal Open Market Committee meeting.
The 9:00 central time September consumer sentiment index is expected to be 75 and the 9:00 September leading indicators report is anticipated to be up 1.3%.
Longer term, stock index futures are likely to be supported by the belief that the Federal Reserve will keep interest rates near zero for several years.
CURRENCY FUTURES
The U.S. dollar index is lower today and has not performed well over the last two days. The greenback should have been supported by the FOMC statement and Fed Chair Powell’s comments. A lower U.S. dollar after bullish news could be viewed as a sign of weakness.
The Japanese yen hit a seven week high and is approaching levels that in the past prompted calls from Japan’s monetary authorities to limit gains in the yen. The upcoming U.S. elections, as well as the ongoing tensions between the U.S. and China have contributed to the safe haven demand for the yen.
Tokyo markets will be closed on Monday and Tuesday next week.
INTEREST RATE MARKET FUTURES
Federal Reserve speakers today are James Bullard at 9:00 and Raphael Bostic at 11:00.
Interest rate market futures at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep short term interest rates low for an extended period. Some analysts believe it will be several years before the Federal Reserve will be in a position to hike its fed funds rate.
However, futures at the long end of the curve, especially the 30-year Treasury bond futures may be undermined by the inflationary aspects of the Federal Reserve’s “average inflation targeting” policy.
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