Follow-Through Gains For Indices
STOCK INDEX FUTURES
U.S. stock index futures advanced late yesterday with follow-through gains today. Investors welcomed developments in Washington as lawmakers neared an agreement that would temporarily avert a government default by mid-month. Yesterday, Republicans proposed to extend the debt ceiling by a fixed dollar amount into December. Negotiations in Washington are expected to continue today.
Treasury Secretary Yellen warned that her department is likely to exhaust its cash-conservation measures by October 18, if Congress doesn’t act.
Jobless claims in the week ending October 2 were to 326,000 when 348,000 were expected.
The 2:00 central time August consumer credit report is anticipated to show an $18.1 billion increase.
Despite the recent pressure, the longer-term fundamental and technical aspects remain supportive for stock index futures.
The U.S. dollar index remains near a one-year high, as firming U.S. Treasury yields make the dollar more attractive to investors. There is a consensus view that the Federal Reserve will announce a tapering of its $120 billion a month in its asset-purchase program at its November policy meeting. Higher prices for the greenback are likely.
German industrial production in August declined substantially more than expected. Total industrial output fell 4.0% in August from July. Economists had forecast a 0.2% drop.
Minutes from the European Central Bank’s September monetary policy meeting showed the ECB considered that a moderately lower pace of net asset purchases for the rest of the year would be appropriate due to favourable financing conditions, along with an improved medium-term outlook for inflation.
Canada’s trade surplus increased to C$1.94B in August, which was above market forecasts of C$0.43B, as exports edged up 0.8%.
INTEREST RATE MARKET FUTURES
Traders continue to weigh the bearish prospects of the Federal Reserve soon tapering its $120 billion a month in asset purchases.
On the bullish side is the historically low fed funds rate of zero to 25 basis points that is unlikely to be increased any time soon.
Loretta Mester of the Federal Reserve will speak at 10:45.
The next leg up for the 30-year Treasury bond futures will likely be after next Federal Open Market Committee meeting on November 3 in a “sell the rumor, buy the fact” situation. The anticipated bearish news of tapering details may be released at that meeting.
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