Written Commentary
STOCK INDEX FUTURES
Stock index futures were lower in the overnight trade but were able to recover and trade higher when the jobless claims report showed a smaller than expected number. Jobless claims in the week ended August 1 were 1,186,000 when 1,442,000 were anticipated.
Negotiations over another fiscal stimulus package continue in Congress. White House officials said that if an agreement is not reached by Friday, talks are likely to stop during the summer recess.
Stock index futures continue to have upside momentum.
CURRENCY FUTURES
The U.S. dollar index is near two year lows. 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.
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 British pound is higher after the Bank of England’s Monetary Policy Committee voted unanimously to keep its benchmark interest rate at an all-time low of 0.1%. Policymakers also voted to leave the size of the central bank’s bond-buying program unchanged at £745 billion ($981 billion).
Bank of England Governor Andrew Bailey said there are no plans to deploy negative interest rates in the coming months.
INTEREST RATE MARKET FUTURES
Futures are being supported by ideas that major central banks, including the Federal Reserve, are likely to keep interest rates low for an extended period.
Robert Kaplan of the Federal Reserve will speak at 9:00 AM.
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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