Written Commentary
Ag Market View for July 26.24
July 26, 2024
STOCK INDEX FUTURES
U.S. stock index futures closed at record highs yesterday. Recent gains are due to better than expected third quarter corporate earnings reports and despite ongoing supply chain challenges and elevated inflationary pressures.
The highlight today will be the conclusion of the Federal Open Market Committee’s two-day policy meeting. A statement will be released at 1:00 central time and Federal Reserve Chairman Jerome Powell will hold a press conference at 1:30. The central bank is expected to announce a tapering of its $120 billion a month in asset purchases.
Mortgage applications fell 3.3% in the latest week, according to data from the Mortgage Bankers Association. Applications to refinance a home loan declined 4.3% and those to purchase a home decreased 1.6%.
The Automatic Data Processing, Inc. National Employment report showed private businesses in the U.S. hired 571,00 workers in October when 400,000 were expected.
The 8:45 central time October PMI composite final is anticipated to be 57.3.
The 9:00 September factory orders report is predicted to show a 0.1% increase and the 9:00 October Institute for Supply Management services index is estimated to be 61.9.
Despite central banks removing some accommodation, the dominant fundamentals remain supportive for stock index futures.
CURRENCY FUTURES
U.S. dollar index futures are likely to firm ahead of the release of the FOMC statement.
The euro area seasonally-adjusted unemployment rate edged down to 7.4% in September, which was in line with market expectations. The number of unemployed decreased 255,000 to 12.079 million.
The IHS Markit/CIPS U.K. Services PMI was revised higher to 59.1 in October from a preliminary estimate of 58.0.
The Bank of England is expected to increase interest rates when it meets tomorrow.
INTEREST RATE MARKET FUTURES
Economists expect the Federal Reserve today will announce a $15 billion reduction in the central bank’s monthly asset purchases, but leave interest rates unchanged. The fed funds target range currently stands at zero to 25 basis points.
Financial futures markets have already priced in a 90% chance of quarter-point tightening by mid-2022 and another rate increase by the end of the year.
Expect higher prices for the 30-year Treasury bond futures after the FOMC meeting is out of the way.
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