Retail Sales Report Shows Strong Gains

STOCK INDEX FUTURES

U.S. stock index futures are higher after a report showed September retail sales increased 1.9% when a gain of 0.7% was expected.

Lawmakers in Washington continued to send mix signals about progress toward a stimulus deal.

September industrial production fell 0.6% when an increase of 0.6% was anticipated and September capacity utilization was 71.5% when 71.9% was estimated.

The 9:00 central time October consumer sentiment index is predicted to be 80.5.

The technical situation remains positive for stock index futures.

CURRENCY FUTURES

The U.S. dollar is lower as safe-haven longs are liquidated.

The euro currency is higher despite news that the euro zone trade surplus widened less than expected. Exports from and imports into the eurozone rose for a fourth straight month in August, but at a slowing pace.

The British pound came off its highs when U.K. Prime Minister Boris Johnson said he would seek a “no-deal” Brexit unless there is a “fundamental change of approach” from the E.U. The U.K. and the E.U. have been divided on key issues including fishing rights, corporate governance and fair competition.

INTEREST RATE MARKET FUTURES

Futures at the longer end of the curve came under pressure when it was reported that U.S. retail sales in September were much stronger than expected.

James Bullard of the Federal Reserve will speak at 12:35.

Interest rate market futures at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep short term interest rates low for an extended period. Many analysts believe it will be several years before the Federal Reserve will be in a position to hike its fed funds rate.

However, futures at the long end of the curve, especially the 30-year Treasury bond futures may be undermined by the inflationary aspects of the Federal Reserve’s “average inflation targeting” policy.

Financial futures markets are predicting there is a 97.7% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at the November 4-5 policy meeting.

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