Written Commentary
Only Limited Flight to Quality Buying in 30-YR T-Bond Futures
- October 30, 2020
- Alan Bush
- @TradewithAFS
STOCK INDEX FUTURES
U.S. stock index futures are lower today due to concerns about the health of the tech sector after quarterly results for some large companies disappointed.
September personal income increased 0.9% when a gain of 0.3% was expected.
The 8:45 central time October Chicago PMI is anticipated to be 58 and the 9:00 October consumer sentiment index is estimated to be 81.2.
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 is lower, and the euro currency is higher on news that the gross domestic product for the euro zone expanded by 12.7% in the third quarter, compared with the previous three months. Analysts had expected growth of 9.4%.
The German economy posted a record expansion in the third quarter in output. The country’s gross domestic product increased 8.2% compared with the previous quarter. Economists forecast a 6.8% expansion.
The British pound is higher as investors hoped that some kind of trade agreement between the U.K. and the E.U. could be secured by early November, after the European Commission president said on Thursday that negotiations were making good progress.
The Japanese yen advanced against the U.S. dollar as investors moved into the safe-haven yen ahead of the U.S. presidential election next week.
The Australian dollar is higher after a report showed Australia’s final demand producer price index advanced by 0.4% quarter-on-quarter in the three months to September, after a 1.2% fall in the previous period.
INTEREST RATE MARKET FUTURES
Sharp declines yesterday for futures took place on news of a poorly received seven-year note auction.
Limited safe-haven buying is coming into the interest rate futures markets today in light of concerns over the state of the global economy, uncertainties surrounding the U.S. November elections and lower stock index futures.
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.
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.
