Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
CURRENCY FUTURES
Yesterday the U.S. dollar index advanced to its highest level since March. However, today the greenback is lower despite bullish on balance U.S. economic reports.
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.
European Central Bank Governing Council member Bostjan Vasle said another interest rate increase cannot be ruled out, even after Thursday’s signal from ECB officials that borrowing costs may have reached a peak.
Wage growth in the euro zone eased slightly to 4.6% year-on-year during the second quarter, which is down from an upwardly revised 4.9% increase in the previous three-month period.
The Bank of England said U.K. consumers are expecting a small increase in inflation over the coming year. The anticipated price increase in 2024 is 3.6%, which is a slight increase from the 3.5% prediction made in May.
STOCK INDEX FUTURES
Stock index futures are lower.
The September Empire State manufacturing index was 1.9 when -10.0 was expected.
Import prices in August increased 0.5% when up 0.3% was anticipated, and export prices were up 1.3% when a gain of 0.4% was estimated.
Industrial production in August increased 0.4% when up 0.1% was predicted, and capacity utilization was 79.7% when 79.3% was forecast.
The 9:00 central time September consumer sentiment index report is expected to show 69.2.
INTEREST RATE MARKET FUTURES
Futures came under pressure when the 7:30 U.S. economic reports were released.
The Federal Open Market Committee is expected to keep its fed funds rate steady this month, while the probability of a quarter-point hike later in the year has been increasing.
Financial futures markets are predicting there is a 97% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is a 3% probability of a 25 basis point increase.
Financial markets are showing a consensus view that the Federal Open Market Committee meeting next week will not call for the end of its tightening cycle this month in its policy statement.
There is a 35% probability that the FOMC will hike its fed funds rate by 25 basis points at its November 1 policy meeting.
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