Written Commentary
STOCK INDEX FUTURES
S&P 500 and NASDAQ futures hit new record highs today.
The National Federation of Independent Business small business optimism index for June was 91.5 when 90.3 was expected.
Federal Reserve Chair Jerome Powell will deliver his semiannual testimony before the Senate Banking Committee today at 9:00 central time. Powell will provide an overview of current economic conditions and give an update on the Federal Reserve’s outlook for the economy.
On Wednesday Powell will testify before the House Financial Services Committee.
The longer term fundamentals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are steady to lower.
In addition to Federal Reserve Chair Powell, other Federal Reserve speakers today are Michael Barr at 8:15 and Michelle Bowman at 12:30.
The U.S. Treasury will auction three-year notes today.
Financial futures markets are suggesting there will be two 25 basis point rate cuts in 2024, despite many Federal Reserve officials predicting only one fed funds rate reduction this year.
Financial futures markets are predicting there is a 75% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
CURRENCY FUTURES
The U.S. dollar Index is higher today but is still close to over three-week lows after losing nearly 1.0% last week. Last week’s pressure on the greenback was due to soft U.S. economic data, which reinforced expectations that the Federal Reserve will have to lower interest rates soon.
The euro currency is a little lower but remains near four-week highs. Traders expect the European Central Bank will lower interest rates one or two more times this year.
Australian consumer sentiment weakened in early July. The Westpac-Melbourne Institute consumer sentiment index declined 1.1% in July, which compares to the 1.7% increase in the previous month.
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