Written Commentary
STOCK INDEX FUTURES
Mortgage applications in the U.S. were down 0.6% in the week ended December 17, following a 4.0% decline in the previous period. Applications to purchase a home fell 3.3%, while those to refinance a home loan rose 2.2%, according to data from the Mortgage Bankers Association.
The third quarter gross domestic product increased 2.3% when 2.1% growth was expected.
The November Chicago Federal Reserve national activity index was 0.37, which compares to 0.75 in October.
The 9:00 central time December consumer confidence index is predicted to be 110.7 and the 9:00 November existing home sales report is estimated to be 6.510 million.
The seasonal tendency for the S&P 500 futures is to be higher on a month-to-month basis in the month of December.
The dominant short-term influence continues to be the variant news.
However, the long-term fundamentals remain bullish on balance for stock index futures.
CURRENCY FUTURES
The U.S. dollar index and the euro currency continue to trade in a broad trading ranges.
The U.K. economy expanded 1.1% on the quarter in the three months to September of 2021, which is below initial estimates of a 1.3% increase, and easing from a downwardly revised 5.4% advance in the previous period.
INTEREST RATE MARKET FUTURES
There was only temporary pressure on futures when the U.S. gross domestic product report was released.
The Federal Reserve’s recent more hawkish turn on monetary policy remains in focus. The Federal Reserve said at its December 15 meeting it would speed up its tapering of bond purchases, putting it on track to conclude the program in March 2022 and paving the way for three interest rate hikes by the end of 2022.
Most analysts expect a first fed funds rate hike in May.
If the U.S. economy weakens it may be difficult for the Fed to justify an accelerated taper of its asset-purchase program, especially now that other major central banks are adding more accommodation or delaying the partial removal of easy monetary policies.
The fundamentals for the interest rate futures market are mostly aligned on the bullish side.
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.
© 2021 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.
