Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
CURRENCY FUTURES
The U.S. dollar index advanced to the highest level since December 2022.
The bullish influence of the ongoing hawkish Federal Reserve remains the dominant influence. The U.S. Federal Reserve made it clear that interest rates in the U.S. will stay higher for longer.
In addition, there is a flight to safety influence supporting the greenback in light of reports from Capitol Hill that little if any progress was made on resolving the debt ceiling issue.
In the longer term, interest rate differential expectations remain favorable for the greenback.
Bank lending to households in the euro zone increased by 1.0% year-on-year in August 2023, which is the lowest growth rate since August 2015. Lending growth to companies slowed sharply to 0.6%, which is the lowest level since December 2015.
The Japanese yen is lower despite recent warnings from Japan’s Ministry of Finance that appropriate action will be taken against rapid foreign exchange moves.
Australian consumer inflation increased 5.2% as expected in the 12 months to August. The reading accelerated from a 4.9% advance seen in July, but still remained substantially under annual highs.
STOCK INDEX FUTURES
Recent weakness is due to the hawkish Federal Reserve, the bearish influence of a potential shutdown of the U.S. government and ongoing labor strike activity. However, stock index futures are higher today.
If Congress does not pass a stopgap funding measure before Sunday, a shutdown of some agencies could delay the routine release of economic data on employment, inflation, wages and output.
Durable goods orders in August increased 0.2% when down 0.3% was expected.
Stock index futures are oversold at these levels.
INTEREST RATE MARKET FUTURES
U.S. mortgage rates jumped last week to the highest level since 2000. The contract rate on a 30-year fixed mortgage increased 10 basis points to 7.41% in the week ended September 22, according to Mortgage Bankers Association.
The Treasury will auction 5-year notes today.
Financial futures markets are predicting there is an 80% probability that the Federal Open Market Committee will keep its fed funds rate unchanged and a 20% probability of a 25 basis point increase at its November 1 policy meeting.
Interested in more futures markets? Explore our Market Dashboards here.
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.
© 2024 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.
