Written Commentary
CURRENCY FUTURES
The U.S. dollar is lower and continues to underperform the news.
There has been only a limited flight-to-quality flow of funds into the greenback, which is a sign of weakness.
In addition, rising Treasury yields are having only a minimal bullish impact on the U.S. dollar.
Japanese yen futures are lower, and earlier today the yen weakened briefly past the 150 yen to the U.S. dollar level in the cash trade.
STOCK INDEX FUTURES
Stock index futures are lower amid concerns about an escalation of the Middle East conflicts. Increasing Treasury yields are also a concern. The benchmark 10-year Treasury yield increased above 5.0%, as investors increasingly accept interest rates will stay higher for longer.
The September Chicago Federal Reserve national activity index was 0.02 when 0.05 was anticipated.
INTEREST RATE MARKET FUTURES
Futures are lower with virtually no flight to quality buying in light of the conflict in the Middle East, which is surprising and a sign weakness.
Some analysts believe the underperforming futures market can be explained by concerns about increasing government offerings of Treasury issues to cover widening deficits.
The yield on 10-year U.S. Treasuries reached as high as 5.021%.
There are no Federal Reserve speakers ahead of the November 1 Federal Open Market Committee meeting, which is in keeping with the Federal Reserve’s self-imposed blackout policy.
Federal Reserve policy limits the extent to which FOMC participants and staff can speak publicly during Federal Reserve blackout periods, which begin on the second Saturday preceding a Federal Open Market Committee meeting and end the Thursday following a policy meeting.
Financial futures markets are now predicting there is a 98% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its November 1 policy meeting.
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