Strength in Stock Indexes
STOCK INDEX FUTURES
Stock index futures are higher and are close to record highs. Some of the strength can be attributed to a reduction in geopolitical concerns.
The August producer price index final was up 0.7%, which compares to the expected gain of 0.6%.
The 9:00 central time July wholesale inventories report is anticipated to show a 0.6% increase.
Overall, the fundamentals and technical aspects remain positive for stock index futures.
The U.S. dollar index firmed when the bullish U.S. producer price index report was released. Longer term, the greenback is likely to be supported by a safe-haven flow of funds.
The British pound is higher despite news that the U.K. economy grew by only 0.1% in July, which is the smallest monthly increase since January.
On the monetary policy front, Bank of England governor Andrew Bailey said the central bank will probably raise interest rates over the next two to three years, while policymaker Michael Saunders said the central bank may need to hike interest rates next year if growth continues.
INTEREST RATE MARKET FUTURES
The 30-year Treasury bond futures were sharply higher yesterday in response to the very strong 30-year Treasury bond auction.
However, prices are lower today in response to the larger than predicted increase in the producer price index.
Traders continue to focus on when the Federal Reserve will taper its $120 billion a month in asset purchases.
The 30-year Treasury bond futures are likely to at least partially recover from the morning pressure.
Also, the longer term trend is higher for the 30-year Treasury bond futures as the rate of growth in the global economy slows.
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.