US Employment Situation Weakens

STOCK INDEX FUTURES

Stock index futures declined yesterday due to weak economic reports, including jobless claims, which increased to 249,000 to the highest level in almost one year. In addition, pressure was linked to disappointing corporate earnings reports, which added to concerns about a slowing economy.

Futures are sharply lower again today in light of the weakening employment situation. Nonfarm payrolls in July increased only 114,000 when up 180,000 were expected, and the unemployment rate increased to 4.3%, which compares to the anticipated 4.1%.

Private payrolls were up 97,000 when a gain of 155,000 was estimated. Average hourly earnings on a month-to-month basis were up 0.2% when a gain of 0.3% was estimated, and the average workweek declined to 34.2 hours when 34.3 hours were expected.

The 9:00 central time June factory orders report is predicted to show a 3.0% decline.

Coming easier credit policies from the Federal Reserve will eventually rescue stock index futures.

 

 

CURRENCY FUTURES

The U.S. dollar index is lower due to mounting concerns about an economic slowdown in the U.S., which could prompt the Federal Reserve to pivot more quickly to an accommodative monetary stance.

Today’s weak employment numbers pressured the greenback for a second day.

Longer term, the U.S. dollar is likely to trend lower due to prospects of a more aggressively accommodative Federal Reserve.

The Reserve Bank of Australia will hold its monetary policy committee meeting on August 6 and is expected to keep its cash rates steady at 4.35%.

 

INTEREST RATE MARKET FUTURES

Futures extended yesterday’s gains after today’s very weak U.S. employment report.

Futures across the board advanced to new highs for the move today.

In light of today’s employment report, there has been a dramatic shift in the outlook for Federal Reserve policy. There is now a 65% probability that the Federal Open Market Committee will lower its fed funds rate by 50 basis points at its September 18 meeting, and there is a 35% chance that the FOMC will reduce its fed funds rate by 25 basis points at the September meeting.

Higher prices are likely for futures.

 

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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now