Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
STOCK INDEX FUTURES
S&P 500, NASDAQ and Dow stock index futures advanced to record highs.
Futures advanced on the first day of trading in 2021, continuing last year’s rally, due to prospects for continued fiscal stimulus, a large number of merger announcements and vaccine rollouts, which increased investor optimism.
The 8:45 central time U.S. December PMI manufacturing final is expected to be 56.6 and the 9:00 November construction spending report is anticipated to show an increase of 1.0%.
Recent positive technical action suggests follow-through gains are likely for stock index futures.
CURRENCY FUTURES
The U.S. dollar index continues to face heavy selling pressure in the first trading day of 2021. In 2020 the greenback lost approximately 7.0%.
Longer term, the U.S. dollar is likely to trend lower due to expectations for an extended period of low interest rates and concerns over rising U.S. levels of debt.
The euro currency is higher despite news that the euro zone December manufacturing PMI was 55.2 when 55.5 was predicted.
Interest rate differential expectations suggest higher prices for the euro longer term.
The Japanese yen hit a 10-month high.
The Australian dollar is close to a 32-month high and the Canadian dollar hit its highest level since May 2018 against the U.S. dollar.
INTEREST RATE MARKET FUTURES
Futures are steady at the front of the curve and are lower at the long end of the curve.
Federal Reserve speakers today are Charles Evans at 9:00, Raphael Bostic at 9:00, Loretta Mester at 11:15 and also at 6:00 p.m.
Financial futures markets are predicting there is a 95.2% probability that the Federal Open Market Committee will keep its key fed funds rate unchanged at 0 to 25 basis points at its January 27, 2021 policy meeting.
In the months ahead the yield curve is likely to steepen, which would put pressure on futures at the long end of the curve, especially the 30-year Treasury bond futures, while futures at the short end of the curve are likely to hold steady.
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