Written Commentary
STOCK INDEX FUTURES
S&P 500 and Dow stock index futures advanced to record highs today in response to stronger than expected third quarter corporate earnings and despite ongoing supply chain challenges and elevated inflationary pressures.
There are three 9:00 central time economic reports. The September new home sales report is expected to show 760,000. The October consumer confidence index is anticipated to be 109.0 and the October Richmond Federal Reserve manufacturing index is predicted to be 5.0.
The longer-term fundamental and technical aspects remain supportive for stock index futures.
CURRENCY FUTURES
U.S. dollar index futures are steady after yesterday advancing above a downtrend line.
Interest rate differential expectations remain supportive to the greenback, and higher prices are likely at least up until the November 3 Federal Open Market Committee policy meeting.
The British pound is higher on news that the Confederation of British Industry’s distributive trades survey’s retail sales balance in the U.K. jumped to +30 in October 2021, which is up from +11 in the previous month and well above market expectations of +13.
The Bank of Canada meets on Wednesday, then the Bank of Japan and European Central Bank meetings are on Thursday. 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 two-year notes.
There are no Federal Reserve speakers today due the communications blackout period ahead of the November 2-3 FOMC policy meeting. Federal Reserve policy limits the extent to which Federal Open Market Committee participants and staff can speak publicly during Federal Reserve blackout periods, which begin the second Saturday preceding a FOMC meeting and end the Thursday following a meeting unless otherwise noted (October 23-November 4).
The next leg up for the 30-year Treasury bond futures will likely be after the next Federal Open Market Committee meeting is out of the way in a “sell the rumor, buy the fact,” situation. The anticipated bearish news of tapering details will likely be released at that meeting.
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