Written Commentary
Ag Market View for July 26.24
July 26, 2024
STOCK INDEX FUTURES
Stock index futures are mixed to lower despite better than expected earnings from major banks.
Retail sales in March declined 1.0% when down 0.4% was expected, and retail sales excluding autos, fell by 0.8% in the same period, compared to analysts’ estimates of down 0.3%.
Import prices in March fell 0.6% when a decline of 0.2% was anticipated, and export prices fell 0.3% when down 0.2% was estimated.
March industrial production increased 0.4% when a gain of 0.3% was predicted and capacity utilization was 79.8% when 78.8% was expected.
The 9:00 central time April consumer sentiment index is predicted to be 62.7 and the 9:00 February business inventories report is estimated to show a 0.3% increase.
Stock index futures have performed very well considering recent strains in the international financial system and recent hawkish comments from Federal Reserve officials.
CURRENCY FUTURES
In the overnight trade the U.S. dollar index hit its lowest level in a year due to the belief that the Federal Reserve might be approaching the end of its tightening cycle.
Annual wholesale price inflation in Germany slowed for a sixth month to 2.0% in March 2023, which is the lowest rate since January 2021 and down from 8.9% in February.
The number of jobs being advertised online in the U.K. on April 6 was 18% lower than a year earlier.
INTEREST RATE MARKET FUTURES
Flight to quality longs are being liquidated in light of strong earnings reports from major U.S. banks.
Futures are lower despite bullish retail sales, and import and export prices reports.
Underlying support for futures remains due to the belief that central banks will not be able to keep raising interest rates much longer.
Markets are currently pricing in a 25 basis point rate increase at the Fed’s May 3 policy meeting. However, easier credit conditions from the Fed are likely later this year.
The technicals and fundamentals remain supportive.
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