Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are lower, as crude oil prices climbed to their highest level in seven years.
In addition, the bears on this market point to prospects of central banks pulling back stimulus, concerns about the pace of the global economic recovery and the ongoing debates over the debt limit in Washington.
On the bullish side is the historically low fed funds rate of zero to 25 basis points.
The longer-term fundamental and technical aspects remain supportive for stock index futures.
CURRENCY FUTURES
The U.S. dollar index advanced and is near a one-year high, recovering from pressure on Friday that was linked to the on balance weak U.S. employment data.
Interest rate differential expectations remain supportive to the greenback, and higher prices are likely at least up until the November 3 Federal Open Market Committee policy meeting.
The euro currency is lower and is near its weakest level since July 2020. Traders anticipate a 10 basis-point rate hike from the European Central Bank by the end of 2022.
The British pound is higher on the belief that the Bank of England could hike interest rates sooner-than-expected.
The Japanese yen fell to its lowest level since December of 2018, while the Bank of Japan is expected to continue its ultra-accommodative monetary policies.
INTEREST RATE MARKET FUTURES
Futures are mostly lower on the belief that the Federal Open Market Committee will announce details of a tapering of its asset-purchase program at its November policy meeting despite Friday’s weak on balance U.S. employment report.
However, at that meeting the FOMC will probably add caveats to the language to leave itself room to alter the tapering schedule if the economy were to underperform.
Charles Evans of the Federal Reserve will speak at 5:00 central time.
I believe a tapering from the FOMC will be a dovish tapering with any reduction being small.
The next leg up for the 30-year Treasury bond futures will likely be after the next FOMC meeting on November 3 is out of the way.
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.
© 2024 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.