Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
STOCK INDEX FUTURES
Stock index futures are lower after the National Federation of Independent Business small business optimism index for August came in at 91.3 when 91.7 was expected.
There are no Federal Reserve speakers ahead of the upcoming Federal Open Market Committee meeting, which is in keeping with the Federal Reserve’s self-imposed blackout period.
Stock index futures will likely at least partially recover from the morning pressure without the headwind of hawkish commentary from Federal Reserve officials.
CURRENCY FUTURES
Now is a good time to be neutral the U.S. dollar, at least in the short term, without the support from hawkish Federal Reserve officials.
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.
The ZEW Indicator of Economic Sentiment for Germany improved slightly to -11.4 in September, which is up from the previous month’s level of -12.3 and surpassing market predictions of -15.0.
German wholesale prices declined for the fifth month in a row in August. Wholesale prices declined by 2.7% in August compared to the same month last year.
Economists see the European Central Bank hiking interest rates one more time to limit inflation either at its September 14 policy meeting or at the October meeting.
INTEREST RATE MARKET FUTURES
Futures are mixed.
The Treasury will auction 10-year notes today.
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 93% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is a 7% probability of a 25 basis point increase.
However, there is a 44% probability that the FOMC will hike its fed funds rate by 25 basis points at its November 1 policy meeting.
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