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Geopolitical Risks Support 30Yr Bonds


S&P 500 and Dow futures advanced to record highs on Friday despite news that the University of Michigan’s consumer sentiment index for the U.S. slumped to 70.2 in August, which is the lowest level since 2011 and one of the six sharpest declines in the past 50 years of the survey. The  August consumer sentiment index was expected to be 81.4.

Stock index futures are lower today, pulling back from record levels as geopolitical and growth concerns weighed on risk appetite.

The August Empire State manufacturing index was 18.3 when 30.0 was anticipated.

Despite lower prices today the fundamentals and technical aspects remain positive for stock index futures.


The U.S. dollar index is higher due to a flight to quality flow of funds.

Federal Reserve Chairman Jerome Powell will hold a townhall discussion on Tuesday and the Federal Open Market Committee’s minutes from its recent policy meeting will be released on Wednesday, which could provide more clarity on the Fed’s moves.

The Japanese yen is higher on news that Japan’s economy grew slightly in the second quarter of 2021. The world’s third-largest economy in the April-June quarter expanded 0.3%, which compares to the market consensus of 0.2% growth and after a downwardly revised 0.9% expansion in the first quarter.


There were sharp gains for the 30-year Treasury bond futures on Friday when the very weak University of Michigan consumer sentiment index was reported.

There were additional gains today when the disappointing August Empire State manufacturing index was released.

In addition, flight to quality buying is supporting futures due to increasing geopolitical risks.

The interest rate futures markets have been indicating since May clues about the state of the global economy and inflation with the U.S. Treasury yield curve flattening. A flattening yield curve suggests a slower rate of global economic growth in the future.

There are growing expectations, fueled by some hawkish Fed comments recently that the Fed may use the August 26-28 Jackson Hole Economic Policy Symposium to announce a tapering of its  asset-purchase program.

However, some traders are questioning why the 30-year Treasury bond futures are substantially off of their May lows if there is an imminent  tapering of the Fed’s asset-purchase program.


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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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