Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower.
Mortgage applications in the U.S. increased 3.0% in the week ended June 23, according to data from the Mortgage Bankers Association.
May wholesale inventories fell 0.1% when unchanged was expected.
Federal Reserve Chair Powell will speak at the European Central Bank Forum on Central Banking this morning at 8:30 central time.
Higher prices for futures are likely after Powell’s speech is out of the way.
CURRENCY FUTURES
The U.S. dollar index is higher.
The euro currency is lower on news that bank lending to households in the euro zone increased 2.1% year-on-year in May 2023, which was the slowest growth rate since December 2016 and below the market consensus of a 2.3% gain.
Australia’s consumer inflation slowed to a 13-month low in May.
Data from the Australian Bureau of Statistics showed its monthly consumer price index increased 5.6% in the year to May, which was the smallest increase since April of last year. That was down from 6.8% in the previous month and well under market predictions of 6.1%.
INTEREST RATE MARKET FUTURES
The Treasury will auction seven-year notes today.
Financial futures markets are predicting there is a 74% probability that the Federal Open Market Committee will hike its fed funds rate by 25 basis points at the July 26 meeting, and there is a 26% chance that the fed funds rate will remain unchanged.
Federal Reserve officials are indicating there will be two more fed funds rate hikes this year. However, financial futures markets pricing suggests the FOMC can only increase rates one more time in 2023.
Most major central banks remain hawkish despite growing evidence of a slowing global economy.
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