Written Commentary
Ag Market View for July 26.24
July 26, 2024
STOCK INDEX FUTURES
Stock index futures are higher due to mostly better than predicted corporate earnings reports.
The 9:00 central time July existing home sales report is expected to show 4.150 million.
The 9:00 August Richmond Federal Reserve manufacturing index is anticipated to be -7.
Traders will likely shift their focus toward the upcoming annual Jackson Hole Economic Symposium, which will start on Thursday.
Federal Reserve Chair Powell will speak on Friday morning and is expected to deliver an economic outlook and interest rate guidance for September monetary policy.
Many analysts believe Powell’s comments will be hawkish on balance.
CURRENCY FUTURES
The U.S. dollar index remains near two-month highs. In recent weeks flight to quality buying has been a supportive factor as well as the recently more hawkish comments from Federal Reserve officials.
The U.S. dollar index will probably remain firm in advance of Fed Chair Powell’s speech on Friday.
European Central Bank President Christine Lagarde will give a speech on Friday at the Federal Reserve’s Jackson Hole Symposium.
Currently, market expectations indicate a 70% probability that the European Central Bank will hike its deposit rate to 4.0% at its policy meeting on September 14, with approximately a 30% chance of the rate remaining unchanged.
The Confederation of British Industry survey’s total order book balance fell six points from the previous month to -15 in August 2023, falling under of market expectations of -13. Also, the gauge measuring output for the last three months declined to -19 from +3 in July, marking the lowest level since September 2020.
INTEREST RATE MARKET FUTURES
Futures are mixed to lower on news that Federal Reserve Bank of Richmond President Thomas Barkin this morning said the Fed needs to achieve the 2.0% inflation target to ensure its credibility.
The majority of Federal Reserve policymakers believe interest rates have not peaked as labor market conditions remain tight and strong wage growth increased the disposable income of households.
Financial futures markets are now predicting there is an 84% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its September 20 policy meeting, and there is a 16% probability of a 25 basis point increase.
Futures are likely to remain under pressure in advance of the Jackson Hole Symposium.
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