Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher on limited news.
Mortgage applications fell 2.3% in the week ended May 27 to the lowest level since December of 2018, which is a third consecutive decrease. Applications to refinance a home dropped 5.4% and those to purchase a home were down 0.6%.
The 8:45 central time May PMI manufacturing final is expected to be 57.5.
There are three 9:00 reports. The May Institute for Supply Management manufacturing index is anticipated to be 54.5. April construction spending is estimated to show a 0.4% increase and the Labor Department’s job openings and labor turnover survey for April is predicted to be 11.400 million.
Also, the Federal Reserve will release its “Beige Book” on the economy at 1:00. On each occasion, a different Federal Reserve district bank compiles anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts.
CURRENCY FUTURES
The euro currency is lower on news that euro zone manufacturing orders fell for first time in almost two years. The S&P Global manufacturing PMI fell to 54.6 in May from 55.5 in April.
The unemployment rate in the euro area was unchanged at a record low of 6.8% in April of 2022, the same as in the previous month and in line with market expectations. There were 11.181 million unemployed persons, which is down by 96,000 from March.
The British pound is lower on news that British manufacturing activity expanded in May at the weakest rate since January 2021.
The Australian dollar is higher on news that the Australian economy advanced 0.8% quarter to quarter in the first quarter of 2022, exceeding market forecasts of 0.5% and after an upwardly revised 3.6% increase in the fourth quarter of 2021.
INTEREST RATE MARKET FUTURES
Financial futures markets are predicting there is a 97.7% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 2.3% probability that the rate will increase by 75 basis points at the June 15 policy meeting.
Federal Reserve speakers today are John Williams t 10:30 and James Bullard at 12:00.
The interest rate market futures appear to be making a bottom on the charts, and the fundamentals are improving.
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