Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher. S&P 500 futures broke out above a symmetrical triangle pattern yesterday, and today a downtrend line that began in early January was penetrated on the upside.
Mortgage applications fell 8.1% in the week ended February 4, which is the biggest decline in almost a year. The refinancing index plunged 7.0%, and the purchase one declined 10.0%, data from the Mortgage Bankers Association showed.
The 9:00 central time December wholesale inventories report is expected to show a 2.0% increase.
CURRENCY FUTURES
The U.S dollar is lower and has underperformed the news recently.
The euro currency advanced despite news that the German trade surplus declined to €7 billion in December of 2021 from €15.1 billion a year ago.
Financial futures markets have priced in up to four Bank of England interest rate increases this year, which in the longer term, will likely support the British pound.
The Japanese yen fell to a one month low in the overnight trade when a Bank of Japan board member said the Bank of Japan will maintain its accommodative stance to ensure the Japanese economy strengthens enough to bring the inflation rate to the BoJ’s 2.0% target.
Interest rate differential expectations suggest the long term trend for the British pound is higher and lower for the Japanese yen.
INTEREST RATE MARKET FUTURES
The Treasury will auction 10-year notes today.
Federal Reserve speakers today are Michelle Bowman at 9:30 and Loretta Mester at 11:00.
Financial futures markets are predicting five fed funds rate hikes in 2022.
Some analysts believe that if the rate of growth in the U.S. economy slows, and also the global economy, it may be difficult for the Federal Reserve and other major central banks to maintain their ramped up hawkish policy stance.
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.
