Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher today and remain near record highs in response to stronger than expected third quarter corporate earnings reports and despite ongoing supply chain challenges and elevated inflationary pressures.
Mortgage applications edged up 0.3% in the latest week, following a 6.3% drop in the previous period, according to data from the Mortgage Bankers Association. Applications to purchase a home increased 3.5%, while those to refinance a home loan fell 1.6%.
Durable goods orders in September fell 0.4% when a decline of 0.9% was expected.
The longer-term fundamental and technical aspects remain supportive for stock index futures.
CURRENCY FUTURES
U.S. dollar index futures are lower, but remain above downtrend line.
Interest rate differential expectations are supportive to the greenback, and higher prices are likely at least up until the November 3 Federal Open Market Committee policy meeting.
The U.S. dollar index is likely to recover from the current lower levels today.
The euro currency is higher on news that the GfK consumer climate indicator in Germany unexpectedly increased to 0.9 heading into November from an upwardly revised 0.4 in October and beating forecasts of -0.5.
Loans to households in the euro area increased 4.1% year-on-year in September, which was little-changed from the previous month’s 4.2% increase. Also, credit to companies was up 2.1%, compared with 1.5% in August.
Britain’s economy is forecast to grow 6.5% in 2021, finance minister Rishi Sunak said today.
The consumer price index in Australia increased 3.0% on the year in the third quarter when a gain of 3.1% was anticipated.
The Bank of Canada meets today, then the Bank of Japan and European Central Bank meetings are tomorrow. Next week the Reserve Bank of Australia meets on Tuesday, the U.S. Federal Reserve on Wednesday, and the Bank of England on Thursday.
INTEREST RATE MARKET FUTURES
The Treasury will auction five-year notes today.
There are no Federal Reserve speakers today due to the communications blackout period ahead of the November 2-3 FOMC policy meeting.
In advance of the upcoming FOMC meeting, the dominant fundamentals for the 30-year Treasury bond futures are offsetting. There is the bullish influence of a slowing rate of growth in the global economy, which is being offset by the bearish influence of the anticipated tapering of the Fed’s $120 billion a month in asset purchases.
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