Weak Durable Goods Report
STOCK INDEX FUTURES
Major U.S. stock index futures remain near record highs. Traders have been encouraged by the Federal Reserve, which said it doesn’t plan to pull back on supportive policies in the near term.
However, stock futures are under some pressure today with lingering concerns over the global economic growth outlook.
The Federal Open Market Committee begins its two-day policy meeting today.
Durable goods orders in June increased 0.8% when a gain of 2.1% was expected.
The 9:00 central time July consumer confidence index is anticipated to be 124.9 and the 9:00 July Richmond Federal Reserve manufacturing index is estimated to be 21.
The fundamentals and technical aspects remain positive for U.S. stock index futures.
The U.S. dollar index is lower today but remains near a four-month high as demand for safe-haven assets remains strong.
In the weeks ahead it is likely that the flight to quality influence that the greenback has enjoyed recently will dominate over other market influences.
The euro currency is higher after a report showed loans to households in the euro area increased 4.0% in June 2021, following a 3.9% increase in the previous month. This was the largest increase in household lending since December 2008. Also, credit to companies was up 1.9%, which was the same pace as in the previous month. Private sector credit growth, including households and non-financial corporations, increased 3.0% in June from 2.7% in May.
The Confederation of British Industry’s distributive trades survey’s retail sales balance in the U.K. came in at +23 in July 2021, which is slightly above market forecasts of +21.
INTEREST RATE MARKET FUTURES
Futures are higher on prospects of slowing global economic growth.
There were additional gains for futures when the weak U.S. durable goods report was released.
The Treasury will auction five-year notes.
The interest rate futures markets have been telegraphing since May clues about the state of the global economy with the U.S. Treasury yield curve flattening for several months. Shorter-dated yields have been steady, while longer-dated yields have declined. A flattening yield curve suggests a slower rate of economic growth in the future.
The Federal Open Market Committee will hold its regularly scheduled policy meeting today and Wednesday. A statement from the FOMC will be released at 1:00 on Wednesday and Federal Reserve Chair Jerome Powell will hold a press conference at 1:30.
No major policy surprises are likely at the meeting.
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