Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
STOCK INDEX FUTURES
Stock index futures are mixed as investors look toward the Federal Reserve’s next monetary policy decision this week and other major central bank policy meetings.
The 9:00 central time September housing market index is expected to be 50.
CURRENCY FUTURES
The U.S. dollar index remains near its highest level in six months.
Longer term, interest rate differential expectations remain favorable for the greenback, especially against the European currencies, since the U.S. economy appears to be holding up relatively well compared to economies in Europe.
Building permits for apartments in Germany declined 31.5% in July from a year ago. There were 21,000 permits approved for building apartments in July, which was 9,600 less than a year earlier. Permits fell 28% for the first seven months of this year.
On Thursday the Bank of England is anticipated to announce its 15th consecutive interest rate increase, raising its key rate by 25 basis points to 5.50%, which is the highest since 2008. Financial markets are pricing in a 70% probability that the central bank will hike its key short-term interest rate by 25 basis points.
On Friday, the Bank of Japan is likely to keep its key rate unchanged at negative 0.1%. Japan has had negative interest rates since early 2016.
Last week, the European Central Bank hiked its target interest rate for a 10th straight time by 25 basis points to 4.0%.
INTEREST RATE MARKET FUTURES
Futures are lower.
The Federal Open Market Committee concludes its two-day meeting on Wednesday. Financial futures markets are overwhelmingly pricing in no change in the fed funds rate, which currently stands at 5.25%-5.50%.
Financial futures markets are predicting there is a 99% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is a 1% probability of a 25 basis point increase.
There is a 31% probability that the FOMC will hike its fed funds rate by 25 basis points to 5.50%-5.75% at its November 1 policy meeting. Late last week the probability of a 25 basis points increase in November was 40%.
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