Written Commentary
STOCK INDEX FUTURES
Stock index futures are extending yesterday’s gains due to prospects of a less hawkish Federal Reserve and on balance better than expected corporate earnings results.
The 8:15 central time September industrial production report is anticipated to show at 0.1% increase and capacity utilization is estimated to be 80.0%.
The 9:00 October housing market index is predicted to be 44, which would be down from last month’s 46.
The technicals are becoming more supportive.
CURRENCY FUTURES
The U.S. dollar index is a little higher after a sharp decline yesterday.
The greenback has been underperforming the news in recent weeks.
The euro currency is lower despite news that expectations for economic growth in Germany showed a slight improvement in October. The ZEW economic research institute said the index of economic expectations improved to minus 59.2 in October from minus 61.9 in September. Economists had predicted the index would decline to minus 65.0.
The Japanese yen fell to another new 32-year low, as Japanese monetary authorities declined to comment on whether they are conducting stealth intervention.
Bank of Japan Governor Kuroda recently said it is not appropriate for Japan to raise interest rates now.
INTEREST RATE MARKET FUTURES
Futures are mixed.
Federal Reserve speakers today are Raphael Bostic at 1:00 and Neel Kashkari at 4:30.
According to financial futures markets, there is a 94.0% probability that the Federal Open Market Committee will increase its fed funds rate by 75 basis points at the November 2 policy meeting and a 6.0% probability that the rate will be hiked by 50 basis points.
Last Thursday there was a 2.0% probability that the FOMC could increase its fed funds rate by 100 basis points.
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