Written Commentary
CURRENCY FUTURES
The U.S. dollar index is higher in response to increasing U.S. Treasury yields. In addition, a flight to safety flow of funds, in light of rising tensions in the Middle East, is supporting the greenback.
Interest rate differentials remain supportive to the U.S. dollar.
Flight to quality buying is supporting the Swiss franc.
Producer prices in Germany dropped 1.4% year-on-year in September, falling further from a 0.8% decrease in the previous two months. Analysts had anticipated a 1.0% decline. This marks the 15th consecutive period of producer price deflation.
European Central Bank policymaker, Peter Kažimír, said all options are on the table for the December policy meeting. He also said the central bank will be in a strong position to ease further if the accelerated pace of disinflation continues.
STOCK INDEX FUTURES
Stock index futures are lower due to rising geopolitical tensions in the Middle East in conjunction with increasing U.S. Treasury yields.
The 9:00 central time September leading indicators report is expected to show a 0.3% decline.
The technical aspects for stock index futures remain supportive.
INTEREST RATE MARKET FUTURES
Futures are steady at the front end of the yield curve but are lower at the long end of the yield curve.
The 30-year U.S. Treasury bond futures declined to the lowest level since July 26.
Some the pressure on futures can be attributed to news from the U.S. Treasury Department that the U.S. budget deficit grew to $1.833 trillion for fiscal 2024, which is the highest outside of the COVID period, as interest on the federal debt exceeded $1 trillion for the first time.
Federal Reserve speakers today are Lorie Logan at 7:55, Neel Kashkari at 12:00 and Jeffrey Schmid at 5:05 PM.
Currently there is a 92% probability that the FOMC will lower its fed funds rate by 25 basis points at its November 7 policy meeting, and there is an 8% chance that the FOMC will keep its key interest rate unchanged at 4.75% – 5.00%.
Futures at the front end of the yield curve will probably hold up better than futures at the long end of the yield curve.
Interested in more futures markets? Explore our Market Dashboards here.
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.
