Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are lower, after yesterday Dow futures advanced to a new record high.
Recent gains are linked to upbeat earnings, which are outweighing inflation fears.
Of the companies in the S&P 500 to have reported results through Wednesday, 81% topped analysts’ earnings forecasts, according to FactSet.
Jobless claims in the week ended October 16 were 290,000 when 300,000 were expected and the October Philadelphia Federal Reserve index was 23.8 when 25.0 was anticipated.
The 9:00 September existing home sales report is predicted to show 6.030 million and the 9:00 September leading indicators report is estimated to be up 0.5%.
The longer-term fundamental and technical aspects remain supportive for stock index futures.
CURRENCY FUTURES
The U.S. dollar index is higher.
As we get closer to the November 3 Federal Open Market Committee meeting, traders are likely to refocus their attention on prospects of the Fed tapering its $120 billion a month in asset- purchases.
The British pound is lower after a report showed the Confederation of British Industry’s quarterly gauge of manufacturing optimism in the U.K. dropped 25 points from the previous period to +2 in Q4 2021, falling further from a 48-year high of +38 that was hit during Q2.
INTEREST RATE MARKET FUTURES
Federal Reserve Bank of Cleveland President Loretta Mester said Wednesday that she believes it is too soon to start talking about raising short-term interest rates. Ms. Mester said she still believes that high inflation this year will ease back toward the Fed’s 2.0% target next year. She said she is on board with the Fed paring back its $120 billion asset-buying effort.
A number of Federal Reserve officials recently indicated that such a pullback is likely to happen at the early November policy meeting.
Fed governor Randal Quarles said Wednesday he expected inflation to “decline considerably next year from its currently very elevated rate.” Mr. Quarles said inflation has been worse and longer-lasting than expected, because demand has temporarily outstripped disrupted supply.
Federal Reserve speakers today are Christopher Waller at 8:00 this morning and John Williams at 8:00 this evening.
The Federal Reserve Bank of Atlanta’s “GDPNow” model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2021 was 0.5% on October 19, which is down from 1.2% growth on October 15.
The next leg up for the 30-year Treasury bond futures will likely be after the next FOMC meeting on November 3 is out of the way.
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.
