Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower after European central banks hiked interest rates.
Jobless claims in the week ended June 17 were 264,000 when 261,000 were expected.
The May Chicago Federal Reserve National Activity Index was -0.15 when -0.08 was anticipated.
The 9:00 May leading indicators report is predicted to show a 0.7% decline and the 9:00 May existing home sales report is predicted to be 4.250 million.
Federal Reserve Chair Jerome Powell will appear before Senate Banking Committee. Yesterday, Powell reiterated that more rate hikes are likely ahead to fight inflation.
His prepared remarks were consistent with what he said in his June 14 press briefing.
Futures will likely trade higher after Powell’s testimony is out of the way.
CURRENCY FUTURES
The Bank of England increased its key interest rate by 50 basis points to 5.0%, which compares to expectations of a smaller 25 basis points hike.
The Norges Bank also surprised markets with a larger-than-expected 50 basis points hike, while the Swiss National Bank raised its policy rate for the fifth time as predicted and hinted at further increases.
The euro currency strengthened to its highest level in six weeks, supported by expectations of higher interest rates from the European Central Bank and other major European central banks due to ongoing concerns about elevated levels of inflation in the region.
INTEREST RATE MARKET FUTURES
Loretta Mester of the Federal Reserve will speak at 9:00.
Despite the larger than estimated interest rate hikes by some European central banks, the probability of a fed funds rate increase from the Federal Reserve in July decreased slightly.
Financial futures markets are predicting there is a 72% probability (yesterday it was 78%) that the Federal Open Market Committee will hike its fed funds rate by 25 basis points at the July 26 meeting, and there is a 28% chance that the fed funds rate will remain unchanged.
Last week the Federal Open Market Committee indicated there will be two more fed funds rate hikes this year. However, financial futures markets pricing suggests the FOMC can only increase rates one more time this year.
Interested in more futures markets? Explore our Market Dashboards here.
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.
