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Alan has been a commodity analyst since 1976, focusing on the fundamental and technical aspects of precious metals, stock index, interest rate and foreign currency markets. He has authored several articles for Futures magazine and Stocks Futures and Options magazine. Alan served on the faculty of Oakton College as instructor of a course entitled “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports. Alan is currently the Senior Financial Economist with ADM Investor Services, Inc.
STOCK INDEX FUTURES
Import prices increased .7% in September from a month earlier, which is the largest monthly rise since an increase of .7% in June 2016. Economists expected a .6% increase in import prices. Import prices are not adjusted for seasonality unlike most measures of inflation.
September industrial production increased .3%, which compares to the expectation of a .2% gain and September capacity utilization was 76% when 76.3% was anticipated.
The 9:00 central time October housing market index is expected to be 64.
The main trend for stock index futures is higher.
The U.S. dollar is stronger following a report that President Donald Trump is favoring Stanford economist John Taylor, who is seen as more hawkish than Fed Chair Janet Yellen, to lead the Federal Reserve.
There are reports that President Trump will meet with Janet Yellen later this week in his search for a new candidate for Fed chair.
Other candidates for Fed chair are Fed Governor Jerome Powell and former Fed official Kevin Warsh. Yellen’s term ends in February.
The euro currency is lower as a result of the ongoing political uncertainties in Spain.
The British pound is weaker in spite of news that consumer price inflation in the U.K. hit its highest over five years, accelerating to a 3% annual rate in September.
Some analysts believe that the report may contribute to the Bank of England raising its key interest rate by 25 basis points at its November 2 policy meeting, which currently stands at a record low 25 basis points. A rate increase at the central bank’s November meeting would be bullish for the pound.
The Canadian dollar and the Australian dollar are lower in spite of stronger crude oil markets.
INTEREST RATE MARKET FUTURES
Futures are under pressure as a result of speculation that the next Fed chair could be on the hawkish side, which I find very unlikely.
U.S. two year Treasury note yields hit their highest level in almost nine years late yesterday.
According to financial futures markets, the probability that the Federal Open Market Committee will increase its fed funds rate at the December 13 meeting is 93%, which compares to 88% yesterday.
Our analysis suggests the Fed will increase its feds funds rate in December, but only one to two more times in 2018 and not three or four times that some at the Fed are predicting.
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