Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher due to better than expected corporate earnings reports. However, fears of recession may limit the upside momentum.
The 2:00 central time June consumer credit report is expected to show a $10 billion increase.
CURRENCY FUTURES
The U.S. dollar index is higher after on Monday it declined to its lowest level since mid-January. Gains are likely to be limited on the belief that a weaker U.S. economy will prompt the Federal Reserve to pivot more aggressively to accommodation.
Longer term, the U.S. dollar will probably trend lower.
German industrial production increased 1.4% month-over-month in June, beating the market consensus of a 1.0% advance.
U.K. house prices increased 0.8% in July from June, when up of 0.3% was expected.
The Japanese yen declined after Deputy Governor Shinichi Uchida said the central bank will refrain from increasing interest rates when the markets are unstable.
INTEREST RATE MARKET FUTURES
The U.S. Treasury will auction 10-year notes today.
Traders dialed back their expectations of an emergency interest rate cut from the Federal Reserve.
There is now a 63% probability that the Federal Open Market Committee will lower its fed funds rate by 50 basis points at its September 18 meeting, and there is a 37% probability that the Fed will lower its rate by 25 basis points.
Higher prices are likely for the interest rate market futures longer term.
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