Upside Breakout in 30-Yr Treasury Bonds
STOCK INDEX FUTURES
Mortgage applications were up 0.3% in the week ending September 10th, which is the first increase in three weeks, according to data from the Mortgage Bankers Association. Applications to purchase a home increased 7.5%, while those to refinance a home declined 3.2%.
The September Empire State manufacturing index was 34.3 when 18.6 was expected.
Import prices in August declined 0.3% when an increase of 0.3% was anticipated and export prices were up 0.4%, which compares to the estimated 0.5% increase.
August Industrial production increased 0.4% when up 0.5% was estimated and August capacity utilization was 76.4%, as predicated.
The September Atlanta Federal Reserve’s business inflation report will be released at 9:00 central time. In August the report showed 3.0%.
S&P 500 futures have been testing a seven-day downtrend line in recent days.
The fundamental and technical aspects remain supportive for stock index futures.
The U.S. dollar index is lower.
Traders are awaiting the Federal Open Market Committee meeting next week for clarity on when the Fed will start cutting stimulus. Any tapering of the Fed’s asset-purchase program would benefit the U.S. dollar.
Industrial output in the euro zone increased by 1.5% from a month earlier in July, recovering from two consecutive periods of contraction and beating market expectations of 0.6% growth.
Hourly labor costs in the euro area fell 0.1% year-on-year in the June quarter of 2021, following a downwardly revised 1.3% increase in the previous three-month period.
The British pound is higher on news that the annual inflation rate in the U.K. increased to 3.2% in August, which is above market forecasts of 2.9%.
INTEREST RATE MARKET FUTURES
The 30-year Treasury bond futures yesterday broke out above a two-month symmetrical triangle congestion pattern.
The dominant fundamental is concern that the pace of the global economic recovery is slowing.
Traders are looking ahead to the September 22 Federal Open Market Committee meeting for guidance as to when the Federal Reserve will taper its $120 billion a month in asset purchases.
Many Fed officials have said recently that they could begin reducing their monthly purchases of bonds by the end of this year if the economy performs as they anticipate.
However, some analysts pushed back on expectations for when the Federal Reserve will begin reducing bond purchases after a recent disappointing payrolls report and yesterday’s smaller than estimated increase in the U.S. consumer price index.
The longer term trend is higher for the 30-year Treasury bond futures despite the tapering talk.
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