Written Commentary
STOCK INDEX FUTURES
Stock index futures quickly advanced when the 7:30 central time U.S. economic reports were released.
The April consumer price index report showed a 0.3% increase as expected, and the consumer price index excluding food and energy was also up 0.3% as predicted. Some traders thought the consumer price index could come in higher.
Retail sales in April were unchanged when a 0.4% increase was estimated.
The Empire State manufacturing index for May was -15.6 when -10.0 was estimated.
The 9:00 central time May housing market index is forecast to be 51, and the 9:00 March business inventories report is predicted to be unchanged.
The fundamentals and technicals are becoming more bullish.
CURRENCY FUTURES
The U.S. dollar index declined when the 7:30 U.S. economic reports were released.
On a monthly basis, seasonally adjusted industrial production in March increased by 0.6% in the euro area and by 0.2% in the EU, according to first estimates from Eurostat.
Bank of France Governor Francois Villeroy de Galhau said the European Central Bank is very likely to start cutting interest rates at its next policy meeting in June. In addition, ECB policymaker, Madis Müller said a June rate cut is very probable.
Housing starts in Canada were down 1.0% in April from March to 240,229 on an annualized rate.
INTEREST RATE MARKET FUTURES
Federal Reserve Chair Powell reiterated yesterday that the central bank will maintain interest rates at a restrictive level until there is confidence that inflation will return to its target, admitting that disinflation has been slower than anticipated this year.
Futures quickly advanced when mostly weaker than expected U.S. economic reports were released.
Federal Reserve speakers today are Michael Barr at 9:00, Neel Kashkari at 11:00 and Michelle Bowman at 2:20.
Financial futures markets are predicting there is a 71% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
The fundamentals and technicals have improved for futures, especially at the long end of the yield curve.
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