Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are lower now that a U.S. stimulus bill is looking more unlikely before the election. This fundamental is dominating price movements in all of the financial markets today.
Jobless claims in the week ended October 10 were 898,000 when 825,000 were expected.
The October Empire State manufacturing index was 10.5, which compares to the anticipated 14.5.
The October Philadelphia Federal Reserve manufacturing index was 32.3 when 14.5 was predicted.
CURRENCY FUTURES
The risk-off sentiment supported the U.S. dollar and put most other major currencies on the defensive. The U.S. dollar was able to move further away from 3-week lows that were reached earlier in the week.
Traders remain cautious ahead of a highly anticipated E.U. summit starting today in Brussels. In addition, there are doubts about whether the E.U. and U.K. will be able to reach a Brexit deal.
The Australian dollar hit a two-week low after the Governor of the Reserve Bank of Australia signaled further easing could be on the table in November.
Australia’s unemployment rate increased by less than expected in September, which is a possible sign that a recovery in the economy is underway. Unemployment rose to 6.9% in September from 6.8% in August, according to the Australian Bureau of Statistics. Analysts had expected a jump to 7.0%.
INTEREST RATE MARKET FUTURES
Futures are higher in a flight to quality move.
Federal Reserve Vice Chairman Richard Clarida said yesterday that even though the U.S. economy’s recovery has been surprisingly strong after a heavy hit earlier in the year, it will need continuing support to recover.
In a separate appearance Wednesday, Loretta Mester of the Federal Reserve Bank of Cleveland said, “The path of the recovery is likely to be bumpy with some fits and starts and uneven progress.”
Federal Reserve speakers today are Raphael Bostic at 8:00, Robert Kaplan at 10:00, Randal Quarles at 10:00, James Bullard 10:10, Thomas Barkin at 1:00 p.m. and Neel Kashkari at 4:00.
Financial futures markets are predicting there is almost a 100% 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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