Written Commentary
FOMC Statement Issued Today
May 1, 2024
by Alan Bush
STOCK INDEX FUTURES
Stock index futures are higher despite renewed U.S.-China tensions.
Crude oil prices advanced for five consecutive days which is supportive to stock index futures.
The 8:45 central time April PMI services index is expected to be 27 and the 9:00 April Institute for Supply Management non-manufacturing index is anticipated to be 37.9.
Global trade issues in recent years tended to be only a temporary negative influence on stock index futures.
In recent weeks stock index futures have overperformed the news.
CURRENCY FUTURES
The U.S. dollar is higher due to global U.S. dollar shortages as emerging markets lose reserves.
The euro currency is lower following a court ruling in Germany that raised questions around the European Central Bank’s main bond buying program. They ruled that some actions taken by the country’s Bundesbank to participate in the asset purchase program were unconstitutional.
The March producer price index in the euro zone fell 1.5% on the month and 2.8% on year. The median estimate called for the March producer price index to be down 1.3% on the month and down 2.6% on the year.
The Australian dollar is steady after the Reserve Bank of Australia left its official cash rate unchanged at 0.25% and reaffirmed its commitment to maintain the 3-year government bond yield at 0.25%.
RBA Governor Philip Lowe said, “The Board is committed to do what it can to support jobs, incomes and businesses during this difficult period and to make sure that Australia is well placed for the expected recovery.”
The central bank of Australia predicted the country’s gross domestic product growth will fall by approximately 10% over the first half of 2020 and by around 6% over the year as a whole. This is likely to be followed by a bounce back of 6% growth in gross domestic product next year.
INTEREST RATE MARKET FUTURES
Flight to quality longs are being liquidated in light of higher stock index futures.
The U.S. Treasury Department reported that it expects to borrow $3 trillion in the second quarter to pay for the aid packages passed by Congress last month. Also, the U.S. Treasury expects to borrow an additional $677 million in the third quarter.
Federal Reserve speakers today are Charles Evans at 9:00, James Bullard at 1:00 and Raphael Bostic at 1:00.
Futures are caught between the bullish influence of weaker global economies and the bearish influence of prospects of increased fiscal stimulus from the U.S., Europe and Asia.
The 30-year Treasury bond futures remain in a broadly based congestion pattern, as the main fundamental influences affecting the long end of the curve are offsetting.
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.
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.
