Written Commentary
CURRENCY FUTURES
The U.S. dollar could only close slightly higher yesterday despite several bullish economic reports.
In recent weeks there has been only a limited flight-to-quality flow of funds into the greenback, which is a sign of longer-term weakness.
Japan’s finance minister said he is watching foreign exchange markets with a sense of urgency and indicated he is ready to take measures to support the Japanese yen.
The Tokyo core consumer price index, which is considered to be a leading indicator of nationwide trends, increased 2.7% in October from a year earlier, which exceeded market forecasts of a 2.5% gain.
STOCK INDEX FUTURES
Stock index futures are higher.
Personal income in September increased 0.3% when up 0.4% was expected, and personal consumption expenditures advanced 0.7% when a gain of 0.5% was anticipated. The PCE price index increased 0.4% when a gain of 0.3% was estimated.
The 9:00 central time October consumer sentiment index is predicted to be 63.0.
Gains are likely to be limited by the uncertainties of the situation in the Mideast.
INTEREST RATE MARKET FUTURES
Futures are steady to a little higher at the front of the yield curve and are lower mid-curve and at the long end of the yield curve.
Michael Barr of the Federal Reserve will speak at 8:00.
Financial futures markets are now predicting there is a 97% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its November 1 policy meeting, and there is a 3% probability of a 25 basis point reduction, which is a reflection of increasing geopolitical risks.
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