Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
STOCK INDEX FUTURES
U.S. stock index futures are higher in spite of conflicting reports on the status of the U.S.-China trade situation.
The 9:00 central time August consumer confidence index is expected to be 129.8 and the 9:00 August Richmond Federal Reserve manufacturing index is anticipated to be -4.
My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks, including the Federal Reserve, are coming and will be the dominant fundamental that supports stock index futures in the long term.
However, in the short term, the bullish influence of the global trend toward lower interest rates is being offset be the bearish influence of geopolitical problems, especially the U.S.-China trade issues.
CURRENCY FUTURES
The euro currency is higher in spite of news that Germany’s gross domestic product in the second quarter contracted 0.1% from the previous quarter.
The Australian dollar declined after the Reserve Bank of Australia deputy governor said the depreciation of the currency of Australia could serve as a shock absorber in financial crisis. He also said the U.S.-China trade war constituted a “significant risk” to Australia’s economy.
The Japanese yen advanced, as some traders tempered their optimism about the probabilities for a quick resolution to the U.S.-China trade war.
Continue to trade the Japanese yen from the long side due to its perceived status as a flight to quality vehicle.
The main trend for the yen is higher.
INTEREST RATE MARKET FUTURES
The 30 year Treasury bond futures are sharply higher in a new wave of flight to quality buying, as the state of the U.S.-China trade situation remains unclear.
The Treasury will auction $40 billion two-year notes today.
Market participants believe there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at its next meeting on September 17-18. Another rate cut after that is very likely before the end of the year.
In the longer term, higher prices are likely for futures, especially at the long end of the curve, as most major central banks, including the Federal Reserve, are likely to embark on a new round of easier credit policies.
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.
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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.
