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More Accommodation Coming From The Federal Reserve

by Alan Bush,

STOCK INDEX FUTURES

Price movements in financial futures markets today are telling us that traders believe more accommodation is coming from the Federal Reserve.  The best explanation for higher stock index futures, a lower U.S. dollar, mostly higher interest rate market futures and a higher gold price is the anticipation of easier credit policies from the Federal Reserve.

NASDAQ futures advanced for a seventh day and remain substantially higher for the year.

The April National Federation of Independent Business small business optimism index was 90.9 when 84.8 was expected.

April retail sales fell 0.8%, as anticipated.

Higher crude oil prices were supportive. Recently Saudi Arabia said it will unilaterally reduce crude oil production by one million barrels a day in June.

In recent weeks stock index futures have overperformed the news.

CURRENCY FUTURES

The U.S. dollar is lower but remains in a trading range.

The British pound is higher even though the Bank of England’s deputy governor said more easing will be needed.

The Japanese yen is higher despite news that a key economic indicator in Japan fell at the fastest rate since 2011 in March and the government warned of a recession.

The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales, dropped a preliminary 4.9 points to 90.5 in March from February.

The Canadian dollar and the Australian dollar are higher due to stronger crude oil prices.

The Australian dollar is higher in spite of news that Australia’s business conditions weakened further. 

INTEREST RATE MARKET FUTURES

The Treasury will auction ten-year notes today.

The Treasury is auctioning $96 billion across the 3-year, 10-year, and the 30-maturities this week. The Treasury also unveiled its 20-year bond that will go on auction next week.

Federal Reserve speakers today are Patrick Harker at 9:00, Randal Quarles at 9:00 and Loretta Mester at 4:00 PM.

Federal Reserve Chairman Jerome Powell will provide his outlook on the economy at a webcast event at 8:00 AM on Wednesday.

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.

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.

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© 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.

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