Written Commentary
Ag Market View for July 26.24
July 26, 2024
STOCK INDEX FUTURES
U.S. stock index futures are higher despite continued uncertainties about the debt ceiling, the Federal Reserve possibly tapering its $120 billion a month in asset-purchases, the global chip shortage, supply-chain snarls, a seven-year high in crude oil prices and slowing global economic growth, including weakening sentiment in Asia and Europe.
On the bullish side is the historically low fed funds rate of zero to 25 basis points that is unlikely to be increased any time soon.
The 8:45 central time September PMI composite final is expected to be 54.5.
The 9:00 September Institute for Supply Management services index is anticipated to be 60.0.
There have been so many bearish articles on the outlook for stock index futures in recent days, that from a contrarian point of view, a bottom is likely soon.
Despite the recent pressure, the longer-term fundamental and technical aspects remain supportive for stock index futures.
CURRENCY FUTURES
The U.S. dollar index advanced, as firming U.S. Treasury yields made the dollar more attractive to investors. There is a consensus view that the Federal Reserve will announce a tapering of its $120 billion a month in its asset-purchase program at its November policy meeting.
Producer prices in the euro area increased 1.1% from a month earlier in August of 2021, following an upwardly revised 2.5% increase in July and below market expectations of a 1.3% advance. This was the fifteenth consecutive month of increases in producer prices, but at the softest rate since April.
The IHS Markit euro zone Services PMI was revised slightly higher to 56.4 in September of 2021 from a preliminary of 56.3, pointing to the slowest growth in the services sector in four months.
The IHS Markit/CIPS U.K. composite PMI was revised higher to 54.9 in September of 2021 from a preliminary of 54.1, but still pointing to much weaker growth in private sector activity than the peak that was seen earlier this summer.
New car registrations in the U.K. fell 34.4% year-on-year to 215,312 units in September 2021. This is the lowest figure for a September month since 1998.
INTEREST RATE MARKET FUTURES
Traders continue to weigh prospects that the Federal Reserve will soon taper its $120 billion a month in asset purchases.
Federal Reserve speakers today are Thomas Barkin at 9:30 and Randal Quarles at 12:15.
The next leg up for the 30-year Treasury bond futures will likely be after the bearish news of tapering details are revealed by the Federal Open Market Committee. The next FOMC meeting will take place on November 3.
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