Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures were lower in the overnight trade in response to weaker stock markets in Asia, but are now higher on the day.
The National Federation of Independent Business small business optimism index for September declined to its lowest in six months, coming in at 99.1 when 99.5 was expected.
The 9:00 central time August Job Openings and Labor Turnover Survey (JOLTS) is anticipated to be 11.013 million. The Labor Department’s JOLTS report tracks monthly changes in job openings and offers rates on hiring and quits.
The bears on this market point to prospects of central banks pulling back stimulus, recent gains in crude oil prices, 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.
Third quarter earnings season starts tomorrow starting with the big banks. According to Refinitiv IBES forecasts, profit growth is estimated to come in at 30% in the third quarter, which is down from 96.3% growth in the previous three-month period.
The longer-term fundamental and technical aspects remain supportive for stock index futures.
CURRENCY FUTURES
The U.S. dollar index advanced to a new 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.
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 U.K. unemployment rate declined to 4.5% in the three months to August, which was in line with market expectations.
INTEREST RATE MARKET FUTURES
Richard Clarida of the Federal Reserve will speak at 10:15.
The Treasury will auction three and 10-year notes today.
Futures were supported by the weaker than predicted National Federation of Independent Business small business optimism index.
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.
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