Written Commentary
STOCK INDEX FUTURES
S&P 500 and NASDAQ futures advanced to record highs today.
Federal Reserve Chairman Jerome Powell delivered a dovish speech at the virtual Jackson Hole symposium on Friday.
Markets focused on the language by the Fed calling to de-couple asset purchases and interest rate decisions. With a timeline for tapering asset purchases still unknown, this was interpreted as meaning that an increase in the fed funds rate is an even longer way off than previously believed.
The 9:00 central time July pending home sales report is expected to a show a 0.3% increase.
The 9:30 August Dallas Federal Reserve manufacturing index is anticipated to be 25.0.
The fundamentals and technical aspects remain positive for stock index futures.
CURRENCY FUTURES
The U.S. dollar index declined on Friday in response to Fed Chair Powell’s dovish interest rate comments.
Longer term, the U.S. dollar is likely to be supported by a safe-haven flow of funds.
The economic sentiment indicator in the euro area dropped to 117.5 in August, which was below market expectations of 117.9.
Germany’s consumer price inflation likely accelerated to 3.9% year-on-year in August 2021, which is in line with market expectations.
Japan’s July large-scale retailers’ sales increased 1.3% on the year.
INTEREST RATE MARKET FUTURES
Futures firmed on Friday in response to Fed Chair Powell’s dovish interest rate comments.
There are growing concerns about the state of the global economic recovery.
In addition, flight to quality buying is supporting futures due to increasing geopolitical risks.
The interest rate futures market have been indicating since May clues about the state of the global economy and inflation with the U.S. Treasury yield curve flattening.
Additional gains are likely for the 30-year Treasury bond futures.
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