Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower after another Federal Reserve official said the central bank needs to keep raising interest rates to rein in inflation.
On Friday, Richmond Federal Reserve President Thomas Barkin said the urge among central bankers was towards faster, front-loaded rate increases.
The July Chicago Federal Reserve national activity index was 0.27 when -0.19 was expected.
Of the 95.0% of S&P 500 companies that have already released their latest earnings reports, approximately 5.0% of them topped expectations.
Stock index futures are likely to have a hard time advancing this week ahead of the Federal Reserve’s annual Jackson Hole, Wyoming economic symposium on August 25-27. Federal Reserve Chairman Jerome Powell will likely stress that tightening has a long way to go when he speaks on Friday.
CURRENCY FUTURES
The U.S. dollar advanced to a six-week high after Thomas Barkin’s hawkish interest rate comments on Friday.
Recently, Federal Reserve policymakers have pointed out that a dovish pivot is unlikely despite signs that inflation could be peaking.
Interest rate differential expectations are becoming more supportive to the U.S. dollar.
Higher prices are likely for the U.S. dollar this week in advance of Fed Chair Powell’s likely hawkish comments at Jackson Hole on Friday.
The euro currency in the cash market briefly fell under the key $1.00 parity level again.
New home prices for Canada increased 0.1% in July compared with June, which is the smallest increase since June 2020.
INTEREST RATE MARKET FUTURES
According to financial futures markets, there is a 45.5% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 54.5% probability that the rate will increase by 75 basis points at the September 21 policy meeting.
The inverted Treasury yield curve continues to flash warnings of economic risks ahead.
Futures will have a hard time rallying this week ahead of the Federal Reserve’s Jackson Hole economic symposium.
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.
