Dow Futures Closing in on Record Highs
STOCK INDEX FUTURES
U.S. stock index futures are mixed, although Dow futures are close to historical highs.
Recent gains are linked to upbeat earnings, which are outweighing inflation fears.
Mortgage applications dropped 6.3% in the latest week, according to data from the Mortgage Bankers Association. Applications to refinance a home loan declined 7.1% and those to purchase a home fell 4.9%.
At 1:00 central time the Federal Reserve will release its Beige Book on the economy. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Federal Reserve district bank compiles anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts.
The longer-term fundamental and technical aspects remain supportive for stock index futures.
The U.S. dollar index is steady.
With Fed tightening probabilities priced in, money markets are showing increasing chances for policy normalization elsewhere, especially in the U.K. where a cumulative 35 basis points in rate hikes are priced in by the end of this year.
However, 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.
Germany’s producer prices jumped 14.2% from a year earlier in September 2021, accelerating from a 12.0% increase in the previous month and beating market expectations of 12.7%. It was the largest increase in producer costs since October 1974.
The annual inflation rate in the U.K. edged down to 3.1% in September from a 9-year high of 3.2% in August and below predictions of 3.2%.
INTEREST RATE MARKET FUTURES
The Treasury will auction 20-year bonds.
Federal Reserve speakers today are Raphael Bostic at 11:00, Charles Evans at 11:00, Neel Kashkari at 11:00, Randal Quarles at 12:00, James Bullard at 12:45 and Mary Daly at 7:35 this evening.
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.
I believe a tapering from the FOMC will be a dovish tapering with any reduction being small.
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