Hawkish Fed Remains Dominant Force
INTEREST RATE MARKET FUTURES
The bearish influence of ongoing hawkish Federal Reserve officials’ comments remains the dominant influence. Traders continue to believe interest rates will remain elevated for a longer period.
Financial futures markets are predicting there is an 80% probability that the Federal Open Market Committee will keep its fed funds rate unchanged and a 20% probability of a 25 basis point increase at its November 1 policy meeting.
The U.S. dollar index is higher and is near its highest level since early March.
The U.S. Federal Reserve made it clear that interest rates in the U.S. will stay higher for longer.
In the longer term, interest rate differential expectations remain favorable for the greenback, since the U.S. economy appears to be holding up relatively well compared to economies elsewhere.
The euro currency is lower after a report showed Germany’s business outlook improved slightly in September but was weaker than economists’ estimates.
The Confederation of British Industry’s monthly balance of retail sales index increased by 30 points from the previous month to -14 in September 2023, compared to August’s over two-year low of -44.
STOCK INDEX FUTURES
U.S. stock index futures are lower following weaker European equity markets.
In addition, there is the bearish influence of a potential shutdown of the U.S. government.
The August Chicago Federal Reserve national activity index was -0.16 when 0.15 was expected. The index was 0.12 in July.
The 9:30 central time September Dallas Federal Reserve manufacturing index is anticipated to be -12.
Stock index futures are oversold at these levels.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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.