Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower but bounced off of the overnight lows.
Yesterday, two Federal Reserve officials cited the need for caution on rate hikes.
Fed Vice Chair Lael Brainard noted how previous rate increases, together with anticipated further rate hikes, will slow the economy in ways that cannot be observed yet during a speech Monday.
She said the Fed is attentive to risks of further adverse shocks, aware that market moves could interact with financial vulnerabilities.
In addition, she said the Fed was likely to continue raising rates and maintaining them at higher levels to ensure inflation comes back to the Fed’s 2.0% target.
Also on Monday Chicago Fed President Charles Evans said under his current outlook for the economy, it would be appropriate for the central bank to pause rate increases at slightly more than 4.5% by next March and then assess how the economy was reacting.
The September National Federation of Independent Business small business optimism index was 92.1 when 91.5 was expected.
Market participants are awaiting Wednesday’s release of the minutes of the Federal Reserve’s September 21 policy meeting.
The September producer price index report will be released on Wednesday, and on Thursday the September consumer price index will be released.
Also, third quarter earnings season kicks off this week.
CURRENCY FUTURES
The U.S. dollar index is lower in response to a slightly less hawkish tone to Federal Reserve comments yesterday.
There may not be much left on the upside for the greenback on the belief that the Federal Reserve may tone down its hawkish rhetoric.
The British pound is higher on news that the jobless rate in the U.K. fell to 3.5% in the three months to August of 2022, which is below 3.6% in the previous period and market forecasts of 3.6%.
INTEREST RATE MARKET FUTURES
Prices are higher due to yesterday’s comments from Federal Reserve officials.
Federal Reserve speakers today are Patrick Harker at 10:30 and Loretta Mester at 11:00..
The Treasury will auction three-year notes today.
According to financial futures markets, there is an 84.0% probability that the Federal Open Market Committee will increase its fed funds rate by 75 basis points at the November 2 policy meeting and a 16.0% probability that the rate will be hiked by 50 basis points.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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.
