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FOMC Tues Meeting in Focus

STOCK INDEX FUTURES

U.S. stock index futures closed at record highs yesterday. Recent gains are due to better than expected third quarter corporate earnings reports and despite ongoing supply chain challenges and elevated inflationary pressures.

The Federal Open Market Committee’s November meeting will take place from Tuesday to Wednesday followed  by a policy statement and a press conference. The central bank is expected to announce a tapering of its $120 billion a month in asset purchases.

The longer-term fundamental and technical aspects remain supportive for stock index futures.

CURRENCY FUTURES

U.S. dollar index futures are higher today as interest rate differential expectations remain supportive to the greenback. Higher prices are likely at least up until tomorrow’s FOMC policy statement.

The IHS Markit euro zone manufacturing PMI was revised lower to 58.3 in October when  58.5 was forecast.

The Reserve Bank of Australia scrapped the 0.1% yield target on April 2024 government bonds at its policy meeting today and omitted its prior projection that interest rates were unlikely to increase until 2024. Policymakers indicated the central bank will continue to buy government bonds at a pace of A$4.0 billion a week until at least mid-February 2022.

The Bank of England is expected to increase interest rates when it meets on Thursday.

INTEREST RATE MARKET FUTURES

Economists expect the Federal Reserve on Wednesday to announce it will begin winding down its asset-buying program but leave interest rates unchanged. The fed funds target range currently stands at zero to 25 basis points.

There are no Federal Reserve speakers today due to the communications blackout period ahead of the November 2-3 FOMC policy meeting.

Expect higher prices for the 30-year Treasury bond futures after the FOMC meeting is out of the way.

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.

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