Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are lower amid further uncertainty around fiscal stimulus talks and the election. Negotiators failed to announce a deal on Wednesday and will speak again today.
Weekly jobless claims were better than expected. Jobless claims in the week ended October 17 were 787,000 when 865,000 were anticipated.
The 9:00 central time September existing home sales report is predicted to show 6.2 million.
The 9:00 September leading indicators index is estimated to be up 0.6% and the 10:00 October Kansas City Federal Reserve manufacturing index is expected to be 13.
The technical situation remains positive for stock index futures.
CURRENCY FUTURES
After four days of declines for the U.S. dollar there is some recovery today. However, lower prices are likely for the greenback longer term.
The euro currency is lower but remains near a five week high.
The British pound is lower despite news that the Confederation of British Industry’s order book balance increased 14 points to -34 in October 2020, which its highest level since March and beat the market expectations of -45.
INTEREST RATE MARKET FUTURES
The Federal Reserve’s Beige Book was released yesterday and indicated the U.S. economy grew at a “slight to modest” pace over the fall. The report found that the recovery was proceeding on separate tracks, with the manufacturing, residential housing and banking industries reporting steady growth, while commercial real estate and overall consumer spending remained to be weak.
Firms said they were “generally optimistic or positive” about the future but noted that there is still a lot of uncertainty in their outlook.
Federal Reserve speakers today are Thomas Barkin at 12:10, Mary Daly at 12:10 and Robert Kaplan at 5:00.
Interest rate market futures at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep short term interest rates low for an extended period. Many analysts believe it will be several years before the Federal Reserve will be in a position to hike its fed funds rate.
However, futures at the long end of the curve, especially the 30-year Treasury bond futures may be undermined by the inflationary aspects of the Federal Reserve’s “average inflation targeting” policy.
Financial futures markets are predicting there is a 97.7% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at the November 4-5 policy meeting.
Although the December 30-year Treasury bond futures are a little higher this morning, I would not be surprised to see a move to lower on the day.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
