Written Commentary
STOCK INDEX FUTURES
Stock index futures were higher in the overnight trade and continued to advance when the May personal income report was released.
Personal income in May increased 0.5% when a gain of 0.4% was expected, and personal consumption expenditures were up 0.2% when up of 0.3% was anticipated.
The 8:45 central time June Chicago PMI is anticipated to be 40.0, and the 9:00 June consumer sentiment index report is predicted to be 65.7.
The longer term fundamentals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index came under pressure when the bearish U.S. personal income report was released. However, the greenback was able to recover and trade higher in light of the ongoing flight to quality influence that has supported the U.S. dollar in recent weeks.
The number of people out of work in Germany increased more than anticipated in June. The number of unemployed increased by 19,000 in seasonally adjusted terms when analysts had expected an increase of 15,000. In addition, the adjusted unemployment rate was 6.0% in June, which is up from 5.9%. Analysts expected the unemployment rate would remain unchanged.
The U.K. economy expanded 0.7% on the quarter in the first quarter of 2024, which is slightly higher than initial estimate of 0.6% and is the strongest expansion in more than two years.
The Japanese yen weakened to around 161 per U.S. dollar, falling to that level for the first time since 1986. Earlier this week Finance Minister Shunichi Suzuki warned that sudden, one-sided moves in the yen are undesirable and that authorities would take appropriate action when needed.
INTEREST RATE MARKET FUTURES
Futures were mostly lower in the overnight trade but quickly firmed when the bullish on balance U.S. personal income report was released.
Federal Reserve speakers today are Michelle Bowman at 11:00 and Mary Daly at 11:40.
Financial futures markets are predicting there is a 66% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
Despite many Fed officials predicting only one fed funds rate cut this year, and some predicting no rate reductions, financial futures markets are suggesting there will be two 25 basis point rate cuts in 2024.
The long term fundamentals are bullish on balance for futures.
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.
