Written Commentary
INTEREST RATE MARKET FUTURES
Futures are higher across the board.
There are no major speeches from Federal Reserve officials due to the blackout period before the June 12 Federal Open Market Committee monetary policy decision.
Financial futures markets are predicting there is a 63% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
The fundamentals are becoming more bullish due to increasing indications that the U.S. economy is weakening. In addition, there is growing pressure on the Federal Reserve to ease monetary policies.
Financial futures markets are predicting there is a 63% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
Higher prices for futures are likely, especially at the long end of the curve.
STOCK INDEX FUTURES
Stock index futures are lower due to recent weaker than expected economic reports.
The 9:00 central time April factory orders report is expected to show a 0.7% increase.
The 9:00 April job Openings and Labor Turnover Survey (JOLTS) is anticipated to be 8.4 million.
The short term outlook has become neutral as the bullish influence of pressure on the Federal Reserve to lower interest rates is being offset by the bearish influence of increasing prospects of a weaker U.S. economy.
CURRENCY FUTURES
In the overnight trade the U.S. dollar index fell to its lowest level since April 10. However, prices recovered and are higher now.
Interest rate differentials expectations are neutral for the U.S dollar as major central banks this year are likely to lower key interest rates.
The number of people out of work in Germany increased more than expected in May, according to the Federal Labour Office. The number of unemployed grew by 25,000 in seasonally adjusted terms when analysts expected that figure to increase by 10,000. The seasonally adjusted jobless rate remained unchanged at 5.9%, matching forecasts.
There are reports that the Bank of Japan is considering reducing bond purchases as early as at the June meeting which takes place on June 13 and 14.
The Bank of Canada will hold its policy meeting tomorrow and a rate cut is expected, although the vote is not expected to be unanimous.
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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.
