Copyright 2017 Investor's Business Daily Inc. Key Financial And Commodity Futures BY BLOOMBERG NEWS Wall Street traders might not be showing enough concern about long-term price pressures. West Texas crude oil has climbed more than 35% from its June low and this week touched a level un- seen in more than two years. While that has nudged up traders’ expec- tations about consumer price gains, market inflation-linked gaug- es known as break-even rates are still pricing in a pace that’s below the Federal Reserve’s 2% annual target. Some investors warn that might be a mistake. “The bond market is currently not discounting this inflation risk; they are mispricing it,” said Ben Emons, chief economist and head of credit portfolio management at Intellectus Partners. “Producer prices will spill over into CPI, which will be lifted also by energy effects. This is all a form of over- heating that may lead to higher in- flation.” Emons said he’s overweight Trea- sury Inflation Protected Securities versus nominal Treasuries. The gap between yields on nominal bonds and TIPS, the break-even rate, predicts that the headline gauge for U.S. consumer prices will only increase at 1.95% over the next three decades. And while the one-year inflation swap has seen an additional 0.3 per- centage point of price-gain pres- sure factored in since August, five- year five-year forward inflation swaps have barely budged. The lat- ter measure shows where traders see inflation for the five-year peri- od beginning in 2022 and is regard- ed as a better long-run indicator. The gap between market pricing and economic assumptions mat- ters. Inflation has been the one mea- sure that has escaped the Fed’s tar- gets despite years of quantitative easing. As investors continue to bal- ance the prospect of further tight- ening in the face of low inflation, a sudden shift in the price outlook could have broader economic impli- cations with some investors al- ready warning about the risk of a re- cession. The clearest sign yet that most bond traders aren’t fretting about inflation is the relentless narrow- ing of the difference between short- and longer-term Treasury yields. Returns on longer-dated debt tend to be more sensitive to changes in interest rates and suffer more from inflation surges, so the flattening of the curve suggests a de- gree of nonchalance. The spread between five- and 30-year yields fell to as little as 77 basis points on Wednesday, mark- ing the flattest curve since Novem- ber 2007, right before the start of an 18-month recession. The differ- ence between two- and 10-year ma- turities is also close to the smallest in a decade. Rick Rieder, global chief invest- ment officer of fixed income at BlackRock, says the curve is out of whack, and he points to signs of up- ward pressure in salaries as an indi- cator of price pressure. Measures such as the Atlanta Fed’s wage tracker and company earnings reports suggest that “we are seeing real wage inflation,” Rieder said in a Bloomberg Televi- sion interview on Nov. 3. “Growth is going to be really solid, and wages are accelerating.” S&P COMP. INDEX Dec 17 PRICE MO %F=84.8 %S=87.2 CLOSE 2580.50 OPEN INTEREST 62385 CME MINI DOW JONES Dec 17 PRICE MO %F=74.7 %S=84.9 CLOSE 233.83 OPEN INTEREST 154213 CBOT 10 YEAR TREASURY Dec 17 PRICE MO %F=63.9 %S=73.3 CLOSE 124-22 OPEN INTEREST 3193071 CBOT BRITISH POUND Dec 17 PRICE MO %F=42.8 %S=39.3 CLOSE 1.3209 OPEN INTEREST 172970 IMM JAPANESE YEN Dec 17 PRICE MO %F=52.7 %S=39.7 CLOSE 0.8816 OPEN INTEREST 271890 in 100th IMM EURO Dec 17 PRICE MO %F=21 %S=17.8 CLOSE 1.1687 OPEN INTEREST 437372 CME MINI NASDAQ 100 Dec 17 PRICE MO %F=95.2 %S=93.5 CLOSE 6314.00 OPEN INTEREST 281834 CME US TREASURY BONDS Dec 17 PRICE MO %F=71.8 %S=74.7 CLOSE 152-10 OPEN INTEREST 769975 CBOT US DOLLAR INDEX Dec 17 PRICE MO %F=67.8 %S=75.4 CLOSE 94.27 OPEN INTEREST 48280 ICE MEXICAN PESO Dec 17 PRICE MO %F=56.7 %S=50.1 CLOSE 0.5196 OPEN INTEREST 177247 in 10th IMM SWISS FRANC Dec 17 PRICE MO %F=27.9 %S=20.8 CLOSE 1.0064 OPEN INTEREST 81120 IMM EURODOLLARS Dec 17 PRICE MO %F=13.4 %S=15.7 CLOSE 98.46 OPEN INTEREST 1712371 IMM COCOA Mar 18 PRICE MO %F=81.3 %S=69 CLOSE 2212.0 OPEN INTEREST 131679 ICE GAS BLEND Jan 18 PRICE MO %F=93.2 %S=93.9 CLOSE 1.7961 OPEN INTEREST 131525 NYM WHEAT Dec 17 PRICE MO %F=47.8 %S=41.3 CLOSE 4.31½ OPEN INTEREST 203160 CBOT SOYBEAN OIL Jan 18 PRICE MO %F=70.9 %S=78.5 CLOSE 34.96 OPEN INTEREST 119562 CBOT LUMBER Jan 18 PRICE MO %F=90.2 %S=87.5 CLOSE 459.60 OPEN INTEREST 5514 CME CANADIAN DOLLAR Dec 17 PRICE MO %F=59.8 %S=42.8 CLOSE 0.7889 OPEN INTEREST 143561 IMM ORANGE JUICE Jan 18 PRICE MO %F=92.4 %S=81.3 CLOSE 162.60 OPEN INTEREST 6130 ICE COTTON 2 Mar 18 PRICE MO %F=72.6 %S=72.8 CLOSE 69.14 OPEN INTEREST 109309 ICE SOYBEAN MEAL Jan 18 PRICE MO %F=28.7 %S=27.7 CLOSE 316.60 OPEN INTEREST 104550 CBOT PLATINUM Jan 18 PRICE MO %F=72.2 %S=66 CLOSE 932.10 OPEN INTEREST 70889 NYM NIKKEI 225 AVGS. Dec 17 PRICE MO %F=77 %S=85.3 CLOSE 22660 OPEN INTEREST 40880 CME 5 YEAR TREASURY Dec 17 PRICE MO %F=89.4 %S=86.3 CLOSE 117-00 OPEN INTEREST 3091638 CBOT As Oil Rises, Bond Market Scorns Inflation Warnings ";-ঞm] bv Ѵblb|;7 ŋ |_;v; =u;; ;;m|v bѴѴ CѴѴ r =-v|Ĵ !;]bv|;u moĹ -ѴѴ ƐĺѶƏƏĺѶƒƐĺƑƔƑƔ ou ]o |oĹ ĺbm;v|ouvĺ1olņ$u-7bm]"llb| TRADING SUMMIT LEARN ESSENTIAL STOCK TRADING STRATEGIES AT A FREE SUMMIT obm v =ou - =ѴѴ 7- o= 1olrѴbl;m|-u bm;vঞm] ;71-ঞom |o Ѵ;-um -0o| vbm] |u-7bm] -m7 bm;vঞm] bm ]uo|_ v|o1hvĺ A| |_; $u-7bm] "llb|ķ oĽѴѴ mo| omѴ ];| ঞrv om ;vv;mঞ-Ѵ bm;vঞm] v|u-|;]b;vķ 0| o bѴѴ -Ѵvo Ѵ;-um _o |o v|u;-lѴbm; ou v|o1h u;v;-u1_ -m7 ];| |_; lov| o| o= ru;lbl ruo71|v =uol m;v|ouĽv vbm;vv -bѴĺ © 2017 Investor’s Business Daily, Inc. Investor’s Business Daily, IBD, CAN SLIM, Leaderboard and corresponding logos are registered trademarks owned by Investor’s Business Daily, Inc. MarketSmith ® is a registered trademark of MarketSmith, Incorporated. "-|u7-ķ o ƐѶķ ƑƏƐƕĺĺĺĺĺĺĺĺĺ _o;mbķ , "-|u7-ķ -m ѵķ ƑƏƐѶ ĺĺĺĺĺĺĺĺĺĺĺĺĺ b-lbķ "-|u7-ķ -m ƑƏķ ƑƏƐѶ ĺĺĺĺĺĺĺĺĺĺ $-lr-ķ "-|u7-ķ -m Ƒƕķ ƑƏƐѶ ĺĺĺĺĺĺĺĺĺĺ |Ѵ-m|-ķ Money Rates Prime Rate: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.00 Base interest rate charged by major U.S. commercial banks on loans to corpora- tions. Discount Rate: Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.75 Secondary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.00 Rate charged by Federal Reserve System on loans to depository institutions Broker Call Loan Rate: . . . . . . . . . . . . . . . . 2.50 Rate charged on short-term loans to brokerage dealers backed by securities. Federal Funds Effective Rate: . . . . . . . 1.16 Rates on overnight loans among financial institutions. Certificates of Deposit: 1 month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.NA 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.28 6 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.45 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.80 Interest rate paid by dealers for certifi- cates of deposit based on the duration of the security. Jumbo CDs: 1 month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.16 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.32 6 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.81 London Interbank Offered Rate: 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.41 6 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.61 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.88 The average of rates paid on dollar deposits. Treasury Bill Auction Results: 3-months (as of Nov. 6) . . . . . . . . . . . . . . . . 1.185 6-months (as of Nov. 6) . . . . . . . . . . . . . . . . . . 1.30 Average discount rate for Treasury bills in minimum units on $10,000. Treasury Bill: 1-year, (as of Nov. 2) . . . . . . . . . . . . . . . . . . . . . . 1.46 Annualized rate on weekly average basis, yield adjusted for constant maturity. INVESTOR'S BUSINESS DAILY FUTURES & BONDS WEEK OF NOVEMBER 13, 2017 B19