Indices Overperform with CPI Release

STOCK INDEX FUTURES

The July consumer price index increased 0.2% as expected, and the July consumer price index, excluding food and energy, advanced 0.2% when a gain of 0.2% was anticipated.

Real average weekly earnings were unchanged in July.

The July producer price index report will be released tomorrow and is predicted to show a 0.2% increase on a month-to-month basis.

Jobless claims in the week ended August 5 were 248,000 when 229,000 were estimated.

Stock index futures are overperforming on the upside in light of today’s slightly bullish economic reports.

CURRENCY FUTURES

The U.S. dollar index is lower and is overreacting on the downside to today’s economic reports, which suggests continued weakness.

Japan’s wholesale inflation eased for a seventh month in July. The 3.6% increase in the corporate goods price index, which measures the price companies charge each other for their goods and services, was slightly above the median prediction of a 3.5% annual increase and follows the 4.3% annual increase in June.

This was the slowest wholesale inflation rate since March 2021.

INTEREST RATE MARKET FUTURES

Yesterday’s 10-year note auction results were neutral to a little better than expected. The Treasury will auction 30-year bonds today.

Most market participants see the Federal Reserve leaving its fed funds rate unchanged when it meets next month.

Financial futures markets are predicting there is a 90% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is a 10% probability of a 25 basis point increase.

The Federal Open Market Committee’s 25 basis point increase in its fed funds rate on July 26 is probably the last one in this cycle.

 

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