Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher and are close to record highs. Some of the strength can be attributed to a reduction in geopolitical concerns.
The August producer price index final was up 0.7%, which compares to the expected gain of 0.6%.
The 9:00 central time July wholesale inventories report is anticipated to show a 0.6% increase.
Overall, the fundamentals and technical aspects remain positive for stock index futures.
CURRENCY FUTURES
The U.S. dollar index firmed when the bullish U.S. producer price index report was released. Longer term, the greenback is likely to be supported by a safe-haven flow of funds.
The British pound is higher despite news that the U.K. economy grew by only 0.1% in July, which is the smallest monthly increase since January.
On the monetary policy front, Bank of England governor Andrew Bailey said the central bank will probably raise interest rates over the next two to three years, while policymaker Michael Saunders said the central bank may need to hike interest rates next year if growth continues.
INTEREST RATE MARKET FUTURES
The 30-year Treasury bond futures were sharply higher yesterday in response to the very strong 30-year Treasury bond auction.
However, prices are lower today in response to the larger than predicted increase in the producer price index.
Traders continue to focus on when the Federal Reserve will taper its $120 billion a month in asset purchases.
The 30-year Treasury bond futures are likely to at least partially recover from the morning pressure.
Also, the longer term trend is higher for the 30-year Treasury bond futures as the rate of growth in the global economy slows.
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