Recent Weakness in Rates Linked to US Budget


Recent weakness in futures at the long end of the yield curve was linked to fears of accelerating U.S. budget deficits.

However, futures are higher across the board today.

Financial futures markets are predicting there is a 69% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.

Financial futures markets are suggesting there will be two 25 basis point rate cuts in 2024, despite many Federal Reserve officials predicting only one fed funds rate cut this year, and some at the Fed predicting no rate reductions.


Stock index futures are lower.

Federal Reserve Chair Jerome Powell spoke at 8:30 central time at a European Central Bank forum.

The 9:00 May Job Openings and Labor Turnover Survey (JOLTS) report is expected to show 7.9 million.

History has shown that the month of July has often been an up month for stock indexes.

The longer term fundamentals remain supportive to stock index futures.



Yesterday the U.S. dollar index gapped lower but was able to recover and close higher on the day. The underlying flight to quality influence continues to underpin the greenback.

Madis Muller of the European Central Bank said the central bank can probably cut rates again before the end of the year, and ECB policymaker Pierre Wunsch said there is room for a second rate cut barring any major negative surprises.

The annual inflation rate in the euro area declined to 2.5% in June 2024 after accelerating to 2.6% in May, and matching market estimates.

The unemployment rate in the euro area was at an all-time low of 6.4% in May 2024, which was unchanged from April and matched market predictions.

The Japanese yen depreciated past 161.5 per U.S. dollar, falling to a new 38-year low, as interest rate differentials between Japan and the U.S. remain wide. There is growing speculation that the Bank of Japan could intervene in foreign exchange markets to support the yen.



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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now