Follow-Through Gains for SIF’s

STOCK INDEX FUTURES

There are follow-through gains today after Friday’s advance.

Stock index futures on Friday closed sharply higher in response to the weaker than expected U.S. employment report.

The logic is that a weaker economy takes pressure off the Federal Reserve to increase interest rates, which is supportive to stock index futures.

CURRENCY FUTURES

The U.S. dollar is steady today after sharp declines last week. The U.S. dollar index fell to its lowest level today since September 20.

There was only a limited flight-to-quality flow of funds into the greenback in October, which was a sign of longer-term weakness.

Factory orders in Germany unexpectedly increased 0.2% month-over-month in September 2023, following a downwardly revised 1.9% surge in August, and beating forecasts of a 1.0% decline.

The S&P Global/CIPS U.K. Construction PMI increased to 45.6 in October 2023, which is up from 45.0 in the previous month but falling short of the market estimate of 46.0.

The Bank of Japan Governor Ueda said the central bank will continue yield curve control and  negative interest rates until sustainable 2.0% inflation is in sight.

The Reserve Bank of Australia will hold its policy meeting tomorrow. Economists forecast the RBA will increase rates by 25 basis points to curb inflation.

INTEREST RATE MARKET FUTURES

Futures are steady at the front of the curve and are lower at the long end of the curve.

Lisa Cook, a member of the Board of Governors of the Federal Reserve, will speak at 10:00 central time.

­Fed Chair Powell is on the calendar to deliver speeches on Wednesday and Thursday.

The yield on the U.S. 10-year Treasury note was around 5.63% as traders are increasingly convinced the Federal Reserve is done with interest rate hikes, after Friday’s data showed the U.S. economy is cooling.

Financial futures markets are predicting there is a 90% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its December 13 policy meeting, and there is a 10% probability of a 25 basis point increase.

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