Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are mixed.
Mortgage applications fell 2.8% in the week ended November 12, according to data from the Mortgage Bankers Association. The refinancing index declined 5.1%, while applications to purchase a home were up 1.5%.
Housing starts in October were 1.520 million when 1.587 million were expected, and building permits were 1.650 million when 1.630 million were anticipated.
A strong earnings season has propelled stock index futures to fresh highs in recent weeks, offsetting investors’ concerns that inflation will remain high for longer than expected, which could force central banks to tighten credit policies sooner.
CURRENCY FUTURES
Interest rate differential expectations suggest the U.S. dollar will continue to advance, while lower prices are likely for the euro currency.
The U.S. dollar index advanced in the overnight trade to its highest level since July of 2020.
The euro currency is lower despite news that construction output in the euro area increased 1.5% year-on-year in September of 2021, recovering from an upwardly revised 2.6% drop in the previous month.
The euro currency has been undermined recently after European Central Bank President Christine Lagarde said on Monday that tightening monetary policy to curb inflation could choke off the euro zone’s economic recovery, in an increasing contrast from hawkish comments from other central banks.
The Japanese yen is lower on news that exports from Japan rose by 9.4% year-to-year in October, which is less than market estimates of 9.9% and slowing from 13.0% growth a month earlier. This was the weakest increase in overseas sales in eight months.
INTEREST RATE MARKET FUTURES
Federal Reserve Bank of St. Louis President James Bullard said the U.S. central bank needs to move more forcefully to confront high inflation levels, while San Francisco Federal Reserve Bank leader Mary Daly stressed that moves to tamp down on price pressures prematurely could result in unneeded pain later if those pressures lessen.
Federal Reserve speakers today are John Williams at 8:10, Loretta Mester at 10:20 and at 11:20, Christopher Waller at 11:40, Mary Daly at 11:40, Charles Evans at 3:05 and Raphael Bostic at 3:10.
The Treasury will auction 20-year bonds.
Most analysts expect a first fed funds rate hike in June or July.
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