30Yr Treasury Bond Futures Advance
STOCK INDEX FUTURES
Stock index futures declined yesterday when traders came to the realization that the global economy may be slowing.
Housing starts in June were 1.643 million when 1.590 million were expected and the more market sensitive building permits were 1.598 million, which compares to the anticipated 1.700 million.
In recent months, stock index futures have shown a tendency to recover from bearish news.
The U.S. dollar index advanced to a 4-month high, as demand for safe-haven assets remained strong. In the weeks ahead it is likely that the flight to quality influence that the greenback is currently enjoying will dominate over other market influences.
Germany’s producer prices increased 8.5% from a year earlier in June, following a 7.2% advance in the previous month and slightly beating market expectations of 8.4.%
Japan’s consumer prices increased 0.2% year-to-year in June 2021, after a 0.1% drop in the previous month. This was the first consumer price inflation since August 2020.
Australian consumer confidence dropped 5.2% last week, which is its sharpest weekly decline since late March 2020.
INTEREST RATE MARKET FUTURES
Safe-haven flows took the 30-year Treasury bond futures to a 5-month high.
In addition, futures were supported by the smaller than predicted U.S. building permits number.
The yield on the benchmark U.S. 10-year Treasury note fell further to a new 5-month low of 1.174%.
Last week, Fed Chair Powell signaled the central bank is not even close to tightening and that inflation will remain high for some months before moderating.
Substantial gains in the 30-year Treasury bond futures since May and a flattening yield curve suggests the rate of inflation may be peaking.
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