Weak Jobs Report Supports Interest Rates

click here for full report

STOCK INDEX FUTURES

U.S. stock index futures are higher with S&P 500 and Dow futures registering a new record high. Recent strength in futures is linked to comments from Federal Reserve officials reiterating pledges to refrain from tightening monetary policy until the labor market has recovered.

April nonfarm payrolls were up only 266,000 when an increase of 998,000 were expected. Private payrolls were up 218,000 when a gain of 893,000 were anticipated and manufacturing payrolls were down 18,000 when an increase of 55,000 was estimated. The unemployment rate increased to 6.1% when 5.8% was predicted.

The 2:00 central time March consumer credit report is expected to show a $17.7 billion increase.

The technical picture remains supportive for stock index futures.

CURRENCY FUTURES

The U.S. dollar index declined after Federal Reserve speakers downplayed the risks of higher inflation and there were additional sharp declines when the disappointing U.S. employment data were released.

The euro currency is higher on news that German industrial production increased in March, beating expectations. Total industrial output, which is comprised of production in manufacturing, energy and construction, increased 2.5% in March from February. Economists had forecast a 1.8% increase.

INTEREST RATE MARKET FUTURES

Futures quickly advanced when the weak U.S. employment data were released.

On Thursday Federal Reserve speakers downplayed the risks of higher inflation. Eric Rosengren said inflationary pressures should be short-lived and should not lead to a pullback in monetary policy, while Loretta Mester said she expects to be deliberately patient unless there is clear evidence that inflation pressures will push inflation to exceed the Fed’s target.

In my minority view, I am seeing indications that the global economy will continue to improve, but growth may not be as strong as many analysts are predicting.

GOLD AND SILVER FUTURES

The double top in June gold futures at 1799.5 on the daily chart was taken out yesterday with follow-through gains today.

Most major central banks will probably keep their accommodation for longer, which remains a bullish influence on the precious metals.

STOCK INDEX FUTURES

U.S. stock index futures are higher with S&P 500 and Dow futures registering a new record high. Recent strength in futures is linked to comments from Federal Reserve officials reiterating pledges to refrain from tightening monetary policy until the labor market has recovered.

April nonfarm payrolls were up only 266,000 when an increase of 998,000 were expected. Private payrolls were up 218,000 when a gain of 893,000 were anticipated and manufacturing payrolls were down 18,000 when an increase of 55,000 was estimated. The unemployment rate increased to 6.1% when 5.8% was predicted.

The 2:00 central time March consumer credit report is expected to show a $17.7 billion increase.

The technical picture remains supportive for stock index futures.

CURRENCY FUTURES

The U.S. dollar index declined after Federal Reserve speakers downplayed the risks of higher inflation and there were additional sharp declines when the disappointing U.S. employment data were released.

The euro currency is higher on news that German industrial production increased in March, beating expectations. Total industrial output, which is comprised of production in manufacturing, energy and construction, increased 2.5% in March from February. Economists had forecast a 1.8% increase.

INTEREST RATE MARKET FUTURES

Futures quickly advanced when the weak U.S. employment data were released.

On Thursday Federal Reserve speakers downplayed the risks of higher inflation. Eric Rosengren said inflationary pressures should be short-lived and should not lead to a pullback in monetary policy, while Loretta Mester said she expects to be deliberately patient unless there is clear evidence that inflation pressures will push inflation to exceed the Fed’s target.

In my minority view, I am seeing indications that the global economy will continue to improve, but growth may not be as strong as many analysts are predicting.

GOLD AND SILVER FUTURES

The double top in June gold futures at 1799.5 on the daily chart was taken out yesterday with follow-through gains today.

Most major central banks will probably keep their accommodation for longer, which remains a bullish influence on the precious metals.

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