Written Commentary
STOCK INDEX FUTURES
Stock index futures advanced due to the bullish interest rate implications of this morning’s weaker than expected housing starts and permits report.
Housing starts in September at an annualized rate were 1.354 million when 1.400 million were expected, and permits at an annualized rate were 1.428 million when 1.500 million were anticipated.
Dow futures hit record highs today.
The technical aspects for stock index futures remain supportive.
CURRENCY FUTURES
The U.S. dollar index is lower but is holding up well despite the bearish September housing starts and permits report. Yesterday the greenback was able to advance to its highest level since August 2.
Interest rate differentials remain supportive to the greenback, and it is likely that the U.S. dollar index will at least partially recover from this morning’s lower prices.
Retail sales in the U.K. unexpectedly increased 0.3% month-over-month in September, following a 1.0% advance in August and beating predictions of a 0.3% decline.
The annual inflation rate in Japan fell to 2.5% in September from 3.0% in the prior month, marking the lowest reading since April.
INTEREST RATE MARKET FUTURES
Futures advanced across the board when the weaker than expected housing starts and permits report was released.
Federal Reserve speakers today our Raphael Bostic at 8:30, Neel Kashkari at 9:00, Christopher Waller at 11:10 and Raphael Bostic at 11:30.
Currently there is an 89% probability that the FOMC will lower its fed funds rate by 25 basis points at its November 7 policy meeting, and there is an 11% chance that the FOMC will keep its key interest rate unchanged at 4.75% – 5.00%.
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