Stock Index Futures Markets Performing Well

STOCK INDEX FUTURES

Jobless claims in the week ended August 13 were 250,000 when 265,000 were expected.

The August Philadelphia Federal Reserve manufacturing index was 6.2 when -5.0 was anticipated.

The 9:00 central time July existing home sales report is estimated to be 4.85 million and the 9:00 July leading indicators report is predicted to be down 0.5%.

Despite an ongoing hawkish tone to Federal Reserve officials’ comments, stock index futures are performing well.

CURRENCY FUTURES

Yesterday’s release of the minutes of the July 27 Federal Open Market Committee policy meeting had little market impact with the U.S. dollar index closing almost unchanged on the day.

However, the U.S. dollar has been firm over the past week due to hawkish remarks from Federal Reserve officials. Several policymakers have pointed out that a dovish pivot is unlikely despite signs that inflation could be peaking.

The euro currency remains close to the key $1.00 parity level after recent economic reports pointed to an economic downturn in the European region.

Full-time employment in Australia in July fell 86,900, while part-time employment increased 46,000. The labor participation rate was 66.4% when 66.8%was expected and the unemployment rate was 3.4%, which compares to the consensus estimate of 3.5%.

INTEREST RATE MARKET FUTURES

The minutes from the Fed’s July policy meeting, released Wednesday, showed officials believe they need to keep hiking interest rates enough to reduce inflation. However, they signaled greater caution with the pace of coming rate increases.

Fed officials voted to raise their benchmark rate by 75 basis points in July, following an increase of the same size in June. Those were the largest rate hikes since 1994.

According to financial futures markets, there is a 65.5% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 34.5% probability that the rate will increase by 75 basis points at the September 21 policy meeting.

The inverted Treasury yield curve continues to flash warnings of economic risks ahead.

Federal Reserve speakers today are Esther George at 12:20 and Neel Kashkari at 12:45.

Higher prices for futures are likely now that the FOMC minutes are out of the way.

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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.

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