Written Commentary
STOCK INDEX FUTURES
Stock index futures in the US kicked off the week on a strong note as corporate earnings come in mostly better than expected.
The October Dallas Federal Reserve manufacturing survey will be released at 9:30 central time. Last month the report came in at -18.1.
Gains are likely to be limited by the uncertainties of the situation in the Mideast.
CURRENCY FUTURES
The U.S. dollar is lower.
In recent weeks there has been only a limited flight-to-quality flow of funds into the greenback, which is a sign of longer-term weakness.
The German economy contracted 0.1% in the third quarter of 2023, marking a reversal from the upwardly revised 0.1% expansion reported in the preceding quarter and surpassing market predictions of a 0.3% contraction.
The economic sentiment indicator in the euro area edged lower to 93.3 in October 2023, which is a slight decrease from the revised 93.4 in September and compared to the market’s estimate of 93.0.
Net approvals for house purchases in the U.K. decreased to 43,300 in September 2023, which is down from August’s revised figure of 45,400 and falling short of the market consensus of 45,000. This marked the lowest level since January.
INTEREST RATE MARKET FUTURES
Futures are lower across the board.
Financial futures markets are now predicting there is a 98% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its November 1 policy meeting, and there is a 2% probability of a 25 basis point reduction, which is a reflection of increasing geopolitical risks.
Also, traders are awaiting the quarterly refunding announcement on Wednesday, with the Treasury anticipated to increase the size of auctions for bills, notes, and bonds to cover the expanding budget deficit.
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