Written Commentary
STOCK INDEX FUTURES
Stock index futures are mixed.
U.S. small-business confidence surged to the highest level in almost 3-1/2 years in November. The November National Federation of Independent Business small business optimism index was 101.7 when 94.5 was expected. In addition, the share of small business owners expecting the economy to improve soared 41 points to 36%, which is the largest since June 2020.
Non-farm productivity on an annual rate in the third quarter increased 2.2% as anticipated, and labor costs were up 0.8% when a gain of 1.9% was predicted.
There are indications that the U.S. economy will perform better than the consensus view in 2025.
The long term fundamentals and technicals remain supportive to stock index futures.
CURRENCIES
The December U.S. dollar index futures are breaking out above a two-week downtrend line today. On Friday the greenback was able to close above a double bottom breakout to the downside, which appeared to be a false sell signal and an oversold situation.
The European Central Bank is widely expected to cut its key deposit rate by 25 basis points for the fourth time, bringing it down to 3.0% on Thursday. Analysts now expect a faster pace of policy easing from the ECB, with predictions of a quarter-point rate reduction at every meeting through June.
The fundamentals and technicals remain supportive to the U.S. dollar, and higher prices are likely.
The fundamentals and technicals remain bearish for the euro currency and the British pound, and lower prices are likely.
The Reserve Bank of Australia left its cash rate unchanged at 4.35% as expected at its policy meeting today.
INTEREST RATES
Futures are lower across the board.
There are no Federal Reserve speakers scheduled between now and the December 18 Federal Open Market Committee meeting, which is in keeping with the central bank’s self-imposed blackout period in advance of policy meetings.
There is an 86% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its December 18 policy meeting, and there is a 14% chance of the FOMC keeping rates unchanged at 4.50% – 4.75%.
It is likely that the FOMC will be slower to add accommodation in 2025 than the consensus view.
Interested in more futures markets? Explore our Market Dashboards here.
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.
