Written Commentary
STOCK INDEX FUTURES
Stock index futures quickly advanced when the June consumer price index report was released with S&P 500 and NASDAQ futures hitting new record highs.
The June consumer price index declined 0.1% when a 0.1% increase was expected, and the consumer price index excluding food and energy increased 0.1%, which compares to the anticipated gain of 0.2%.
Jobless claims in the week ended July 6 were 222,000 when 239,000 were predicted.
The longer term fundamentals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures advanced across the board as a result of the decline in the June consumer price index.
Federal Reserve Chair Jerome Powell in his testimony to the Senate Banking Committee yesterday reiterated that the Fed needs more supporting evidence that shows inflation is moving sustainably toward its 2.0% target before lowering interest rates.
Also yesterday, Federal Reserve Board Governor Lisa Cook said the central bank would be responsive if the unemployment rate situation changes quickly.
The U.S. Treasury will auction 30-year bonds today.
Federal Reserve speakers today are Raphael Bostic at 10:30 central time and Alberto Musalem at 12:00.
Financial futures markets are predicting there is an 87% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
CURRENCY FUTURES
The U.S. dollar index came under pressure when the U.S. consumer price index report was released, which applies pressure on the Federal Reserve to lower interest rates sooner rather than later.
Traders believe the European Central Bank will lower key interest rates one or two times this year, after a recent report showed preliminary figures for the annual inflation rate in the euro area eased in June to 2.5%.
The U.K. economy expanded 0.4% month-over-month in May, beating forecasts of 0.2% growth.
The Bank of Japan is expected to announce bond purchase tapering plans at its July 31 policy meeting.
Consumer inflation expectations in Australia were slightly lower at 4.3% in July, which compares to 4.4% in June.
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.
