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FOMC Dovish on Balance Today

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STOCK INDEX FUTURES

U.S. stock index futures are higher, as traders await the conclusion of the Federal Reserve's two-day monetary policy meeting.

In addition, there is renewed optimism for a bipartisan economic stimulus package.

August retail sales increased 0.6% when a gain of 1.0% was expected.

There are three 9:00 central time reports. The September housing market index is anticipated to be 78 and the July business inventories report is estimated to show a 0.1% increase. The Atlanta Fed's Business Inflation Expectations last month was 1.7%.

I am expecting the statement from the Federal Open Market Committee today will be dovish on balance.

CURRENCY FUTURES

The U.S. dollar index is lower, and the euro currency is higher, as traders expect a dovish on balance statement from the FOMC.

The British pound advanced on news that U.K. inflation fell in August to its lowest level for nearly five years but was above expectations.

The Bank of England will hold its policy meeting tomorrow. No change in interest rate policies is expected. Traders will focus on the statement.

INTEREST RATE MARKET FUTURES

The Fed's two-day meeting concludes today with a policy statement at 1:00 p.m. and Powell's press conference at 1:30 p.m. Financial futures markets are predicting there is a 98% probability that the FOMC will maintain its fed funds target rate at zero to 25 basis points.

The FOMC will likely elaborate on its recently announced average inflation targeting framework. The Feds policy suggests it will seek inflation exceeding 2.0% for a period of time to offset recent inflation undershoots.

Fed Chair Powell is likely to speak about the need for Congress to provide more fiscal stimulus. In addition, Mr. Powell and may open the door to shifting the emphasis to asset purchases.

Interest rate market futures at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep short term interest rates low for an extended period. Some analysts believe it will be several years before the Federal Reserve will be in a position to hike its fed funds rate.

However, futures at the long end of the curve, especially the 30-year Treasury bond futures may be undermined by the inflationary aspects of the Federal Reserves average inflation targeting policy.

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at alan.bush@admis.com. Thank you.

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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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