Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher despite weaker than expected economic reports.
Mortgage applications in the U.S. declined 2.4% in the week ending August 27, following a 1.6% gain in the previous period, according to data from the Mortgage Bankers Association. Applications to refinance a home declined 3.8%, while those to purchase a home increased 0.6%.
The national employment report from Automated Data Processing showed 374,000 new jobs in August, which is well below market expectations of a 613,000 increase. The ADP said it has seen a decline in new hires following job growth in first half of 2021.
The 8:45 August PMI manufacturing final is predicted to be 61.2.
The 9:00 August Institute for Supply Management manufacturing Index is estimated to be 59.0 and the 9:00 July construction spending report is expected to show a 0.3% increase.
The fundamental and technical aspects remain supportive.
CURRENCY FUTURES
The U.S. dollar came under pressure when the weak ADP employment change report was released.
The unemployment rate in the euro area edged down to 7.6% in July from an upwardly revised 7.8% in June, matching analysts’ forecasts. This the lowest reading since May of last year as the number of unemployed people declined 430,000 to 14.613 million.
The ECB will hold its next policy meeting on September 9. It is likely that ECB will continue to communicate that monetary policy will remain loose for longer despite calls for the central bank to scale-back its asset purchase program.
INTEREST RATE MARKET FUTURES
There is growing evidence that growth in the U.S. economy is slowing.
The flattening U.S. Treasury yield curve since May offered clues about the state of the global economy and inflation. A flattening yield curve suggests a slower rate of global economic growth in the future.
Higher prices are likely for the 30-year Treasury bond futures.
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