Written Commentary
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.
CURRENCY 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.
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.
