Empire State Manufacturing Index Falls
STOCK INDEX FUTURES
Stock index futures started the week on a positive note with investors hopeful that the impasse regarding the debt ceiling would soon come to an end.
The May Empire State manufacturing index fell to negative 31.8 when negative 2.0 was expected.
Stock index futures have performed very well recently despite more hawkish comments from Federal Reserve officials.
The U.S. dollar index was lower in the overnight trade with follow-through selling in response to the weak Empire State manufacturing index.
Industrial production in the euro area declined 4.1% month-over-month in March 2023, which compares to the anticipated 2.5% decrease.
Germany’s wholesale price index fell by 0.5% on the year and 0.4% on the previous month.
Hawkish comments from Federal Reserve officials have supported the U.S. dollar recently. However, gains in the greenback will probably be short-lived, since interest rate differentials are likely to undermine the U.S. dollar in the longer term.
INTEREST RATE MARKET FUTURES
Flight to quality longs were liquidated due to a slightly more optimistic tone to the debt ceiling situation.
In addition, there was pressure on futures when Federal Reserve Bank of Atlanta President Raphael Bostic pushed back against ideas that the central bank will cut interest rates this year. He said, “My baseline case is we won’t really be thinking about cutting until well into 2024.”
Other Federal Reserve speakers today are Neel Kashkari at 8:15 and Thomas Barkin at 11:30.
The Federal Open Market Committee will probably keep its fed funds rate unchanged at its June 14 policy meeting.
The technicals and fundamentals remain supportive to futures.
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