Written Commentary
STOCK INDEX FUTURES
Flight to Quality Supports U.S. Dollar and Treasury Futures
S&P 500 and NASDAQ futures advanced to new record yesterday.
The 8:45 central time June manufacturing PMI is expected to be 51.0.
The 9:00 May existing home sales report is anticipated to show 4.10 million, and the 9:00 May leading indicators report is predicted to be down 0.3%.
CURRENCY FUTURES
The U.S. dollar index continues to be underpinned by flight to safety demand in light of political uncertainties in Europe and rising tensions in the middle East.
The euro currency is lower on news that the HCOB euro zone Composite PMI fell to 50.8 in June of 2024 from 52.2 in the previous month, which is substantially under market expectations of 52.5.
The HCOB Germany Manufacturing PMI declined to 43.4 in June 2024 from 45.4 in May and well under predictions of 46.4.
U.K. retail sales increased 2.9% in May after falling 2.3% in April. This suggests an interest rate cut from the Bank of England in August may be less likely.
The annual inflation rate in Japan accelerated to 2.8% in May 2024 from 2.5% in April, pointing to the highest level since February.
INTEREST RATE MARKET FUTURES
Futures are higher with some of the strength due to a flight to quality flow of funds.
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 reduction this year, financial futures markets are suggesting a second interest rate cut is likely before the end of 2024.
September 30-year Treasury bond futures are likely to break out to the upside from a six-day triangle pattern on the daily chart.
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