Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower due to weaker than expected corporate earnings reports.
In addition, the producer price index jumped 1.1% month-over-month in June of 2022, which is the most in three months and above market forecasts of 0.8%.
Jobless claims in the week ended July 9 increased by 9,000 to 244,000 when 234,000 were anticipated. This is the highest since November 2021.
Prices are likely to partially recover this afternoon.
CURRENCY FUTURES
The U.S. dollar index advanced to a new 20-year high as interest rate differential expectations drive the greenback higher. The Federal Reserve is likely to hike interest rates more than other major central banks. Continued strength is likely for the U.S. dollar.
The euro currency is lower, dragged down by recessionary fears and a bigger discrepancy between the European Central Bank and Federal Reserve policies.
Wholesale prices in Germany increased 21.2% year-on-year in June of 2022, after a 22.9% gain in the previous month and a record high of 23.8% in April.
Lower prices are likely for the euro currency.
Yesterday the Bank of Canada raised its policy rate by a full percentage point to 2.50% from 1.50%, which is the biggest one time increase since 1998, and indicated further rate increases may be necessary.
The Japanese yen fell to its lowest level against the U.S. dollar since 1998.
Australia’s unemployment rate in June fell to the lowest level since August 1974. The unemployment rate dropped to 3.5% in June, which compares to the expected rate of 3.8%.
INTEREST RATE MARKET FUTURES
Yesterday’s release of the Federal Reserve’s Beige Book on the economy showed several parts of the country showed signs of a slowdown in recent weeks.
Christopher Waller of the Federal Reserve will speak at 10:00 central time.
Portions of the U.S. yield curve remained inverted with yields on shorter-dated Treasury issues above those of longer-dated debt.
According to financial futures markets, there is an 88.1% probability that the Federal Open Market Committee will hike its fed funds rate by 100 basis points and a 11.9% probability that the rate will increase by 75 basis points at the July 27 meeting.
Prices are likely to partially recover this afternoon.
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.
