Written Commentary
STOCK INDEX FUTURES
S&P 500, Dow and Russell 2000 futures soared to record highs due to vaccine progress and ongoing pressure for central banks to add even more accommodation.
There are no major economic reports scheduled for today.
There is rule of thumb that new record highs in any market suggests follow-through strength is likely. In some cases, the additional strength can be substantial. The logic behind this is that, if the fundamentals are powerful enough to propel a market to new historical highs, they are probably strong enough to persist for a while longer and push prices even higher.
CURRENCY FUTURES
The U.S. dollar is higher but remains near two month lows.
The greenback has been weakening since May amid rising debt levels coupled with expectations for an extended period of low interest rates.
Longer term, the U.S. dollar is likely to drift lower.
The euro currency is higher after a report showed German exports continued their recovery in September, although at a slower rate than in previous months, increasing 2.3% from August in adjusted terms. Economists had forecast a 2.4% increase in exports in adjusted terms.
Flight to quality currencies, such as the Swiss franc and the Japanese yen, were liquidated in light of sharply higher stock index futures.
INTEREST RATE MARKET FUTURES
Safe-haven longs were liquidated at the mid to longer end of the yield curve, especially the 30-year Treasury bond futures.
Federal Reserve speakers today are Loretta Mester at 12:30 and Patrick Harker at 1:20.
The Treasury will auction three-year notes today.
The yield curve is likely to continue to steepen, which should put pressure on the futures at the long end of the curve, while futures at the short end of the curve are likely to hold steady.
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