Written Commentary
CURRENCY FUTURES
The U.S. dollar index firmed when the ADP employment report was released. In addition, there is underlying support due to the greenback’s safe haven-status in light of increasing geopolitical risks in the Middle East.
The unemployment rate in the euro area was unchanged from the prior month at 6.4% in August, holding at its lowest level on record, and was in line with market estimates.
The consumer confidence index in Japan increased to 36.9 in September from August’s 36.7 but was under market estimates of 37.1. The September figure showed the highest consumer morale since April.
INTEREST RATE MARKET FUTURES
Futures came under pressure, especially at the long end of the curve, when the ADP employment report was released.
Federal Reserve speakers today are Beth Hammack at 8:00, Alberto Musalem at 9:05, Michelle Bowman at 10:00 and Thomas Barkin at 11:15.
It is widely expected that the Federal Open Market Committee will reduce its key interest rate again at its November meeting.
Currently there is a 64% probability that the FOMC will lower its fed funds rate by 25 basis points at its November 7 policy meeting, and there is a 36% chance that the FOMC will reduce its key rate by 50 basis points.
STOCK INDEX FUTURES
Stock index futures were lower in the overnight trade in light of increased geopolitical tensions in the Middle East. In addition, Gulf Coast and East Coast ports dock workers went on strike yesterday, which threatens to disrupt supply chains nationwide, and is also having a bearish influence on stock index futures.
The September ADP employment report showed an increase of 143,000 when a gain of 121,500 was expected.
Stock index futures have recently performed better than the news would suggest, which should be viewed as a sign of strength.
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