Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are higher in response to stronger than expected third quarter corporate earnings.
Also, investors continue to digest yesterday’s release of the September 21-22 Federal Open Market Committee meeting minutes, which showed the Fed could start tapering as early as mid-November.
Jobless claims in the week ended October 9 were 293,000 when 320,000 were expected.
September producer prices for final demand were up 0.5% month-to-month, which is the smallest increase so far this year, and below market forecasts of a 0.6% gain.
The producer price index, excluding food and energy, increased 0.2%, which compares to the estimated gain of 0.5%.
The longer-term fundamental and technical aspects remain supportive for stock index futures.
CURRENCY FUTURES
U.S. dollar index futures are lower today, but are still near a one-year high, as firming U.S. Treasury yields make the dollar more attractive to investors.
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.
Australia’s economy continued shedding jobs due to lockdowns in September. Lockdowns across Australia’s two largest states helped drive the loss of 138,000 jobs in September.
The unemployment rate in Australia increased to 4.6% in September from 4.5% in August.
INTEREST RATE MARKET FUTURES
The Federal Open Market Committee on Wednesday released the minutes from its September meeting. Federal Reserve officials last month reviewed plans to start reducing their bond-buying stimulus program in November and to possibly end the asset purchases entirely by the middle of 2022. The minutes revealed a stronger consensus of how to begin scaling back the $120 billion in monthly purchases of Treasury and mortgage securities.
Federal Reserve governor Michelle Bowman warned in a speech Wednesday night of growing risks that supply-chain disruptions could keep inflation elevated for longer than forecasters have predicted.
Federal Reserve speakers today are James Bullard at 7:35, Raphael Bostic at 8:00 and again at 9:00, John Williams at 12:00, Thomas Barkin at 12:00 and Patrick Harker at 5:00.
The next leg up for the 30-year Treasury bond futures will likely be after the next Federal Open Market Committee meeting on November 3, 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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