Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher.
There are no major economic reports scheduled for today.
On Friday S&P 500 futures hit a new high for the year.
Futures continue to overperform the news.
CURRENCY FUTURES
The U.S. dollar index is lower.
The European Central Bank will decide monetary policy on Thursday, and recent comments from officials suggest borrowing costs will continue to increase.
The ECB is expected to hike rates by 25 basis points on Thursday, after surprise hawkish moves from the Bank of Canada and the Reserve Bank of Australia last week.
Japan’s wholesale inflation rate slowed for a fifth consecutive month in May. The corporate goods price index, which measures the price companies charge each other for goods and services, increased 5.1% in May compared with a year ago. This is slower than the median market estimate for a 5.5% gain.
The increase came after a revised 5.9% gain in April and was well below the peak of 10.6% hit in December last year.
The Bank of Japan is expected to maintain its ultra-loose monetary policy ats its policy meeting on June 16 and maintain its forecast for a moderate economic recovery.
INTEREST RATE MARKET FUTURES
Futures are higher.
The Treasury will auction three and 10-year notes today.
There are no major Federal Reserve speakers scheduled for today.
Financial futures markets are predicting there is a 74% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its June 14 policy meeting, and there is a 26% chance of a 25 basis point increase.
However, there is over a 50% probability that the FOMC will hike its fed funds rate by 25 basis points at the July 26 policy meeting.
Traders now await the U.S. consumer price index report on Tuesday and the producer price index report on Wednesday for further clarity on inflationary pressures.
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