Written Commentary
STOCK INDEX FUTURES
Global stock markets sold off in recent days due to reduced confidence in the global economic recovery.
The U.S. third quarter gross domestic product increased 33.1% when an increase of 30.9% was expected and personal consumption expenditures advanced 40.7% when a gain of 38.9% was anticipated.
Jobless claims in the week ended October 24 were 751,000 when 758,000 were estimated.
The 9:00 central time September home sales index is predicted to show a 3.5% increase.
Increased volatility, in light of the uncertainties of the U.S. November election, is a good reason to reduce trading size or stand aside.
CURRENCY FUTURES
The U.S. dollar extended its gains in a flight to quality move due to concerns about the global economic recovery and rising stock market volatility.
The European Central Bank at its policy meeting today decided to keep its rates and wider monetary policy unchanged, as expected.
The euro is lower despite news that German jobless claims fell again in October, dropping much more than analysts had expected. Jobless claims declined by 35,000 in October after falling by a revised 10,000 in September. Economists had forecast a decrease of 5,000. The adjusted unemployment rate fell to 6.2% from 6.3% in September, which is below the 6.3% forecast by economists.
The Bank of Japan kept its monetary policy unchanged and maintained its view that the Japanese economy is gradually recovering. The BoJ maintained its target for short-term interest rates at minus 0.1% and its target for the 10-year Japanese government bond yield at around zero.
In addition, the central bank kept its annual target for purchases of stock exchange-traded funds at 12 trillion yen ($115.04 billion) and kept the limit for commercial paper and corporate bond purchases at Y20 trillion.
Yesterday, the Bank of Canada at its policy meeting left its benchmark interest rate unchanged at the effective lower bound of 0.25%, as widely expected.
INTEREST RATE MARKET FUTURES
Safe-haven buying is coming into the interest rate futures markets in light of concerns over the state of the global economy and the uncertainties surrounding the U.S. November elections.
However, futures are off of the highs after the stronger than expected gross domestic product and jobless claims reports were released.
The Treasury will auction seven-year notes today.
Financial futures markets are predicting there is a 97.7% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at the November 4-5 policy meeting.
Political markets are the most difficult to trade, which is a reason to reduce trading size.
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.
