SP500 Break Out Above Downtrend Line

STOCK INDEX FUTURES

S&P 500 futures decisively advanced above a downtrend line that started in early September.

U.S. stock index futures are higher following mostly stronger stock markets in Europe.

European equity markets advanced due to a combination of national governments introducing new fiscal measures to support economies across the region.

In addition, there are lingering hopes for a fiscal deal in the U.S. that may still happen before the election.

Also, merger news was a source of the price gains.

The 9:30 central time September Dallas Federal Reserve manufacturing index is expected to be 8.5.

CURRENCY FUTURES

The U.S dollar index is lower, and the euro currency is higher due to new fiscal measures in the euro zone.

The British pound jumped more than 1.4% against the U.S. dollar and 1.0% against the euro currency as the last scheduled round of talks between the U.K. and the European Union on their post-Brexit trade relationship began today in Brussels. There are new hopes for a compromise in the trade talks.

Higher crude oil prices supported the “commodity currencies,” the Canadian dollar and the Australian dollar.

INTEREST RATE MARKET FUTURES

Interest rate market futures at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep short term interest rates low for an extended period. Many analysts believe it will be several years, possibly not until 2023, before the Federal Reserve will be in a position to hike its fed funds rate, which currently stands at zero to 25 basis points.

However, futures at the long end of the curve, especially the 30-year Treasury bond futures may be undermined by the inflationary aspects of the Federal Reserve’s “average inflation targeting” policy, along with the potential for a global economic recovery.

Financial futures markets are predicting there is a 98.8% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at the November 4-5 policy meeting.

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