Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher
Durable goods orders in April increased 0.7% when down 0.5% was expected.
The 9:00 central time May consumer sentiment index is anticipated to be 67.4, and year ahead inflation expectations are predicted to be 3.5%.
Futures are performing well considering today’s news, which suggests follow-through gains are likely for stock index futures.
The fundamentals and technicals remain supportive.
CURRENCY FUTURES
The U.S. dollar index is lower and is underperforming the news.
European Central Bank policymaker, Joachim Nagel, said the probability of a June interest rate cut is increasing. A comment of this nature is a relatively strong indication that the ECB will lower rates on June 6, since Nagel is considered to be one of the more hawkish members.
German first quarter adjusted gross domestic product increased 0.2%, which was as forecast.
Japan’s consumer inflation grew at a slower rate in April but remains above the Bank of Japan’s 2.0% target. Consumer prices increased 2.5% from a year earlier in April, which compares with the 2.7% increase in March.
INTEREST RATE MARKET FUTURES
Federal Reserve Bank of Atlanta President Raphael Bostic said monetary policy has been less effective in slowing growth than in previous cycles, which reinforces the need to keep interest rates higher for longer to reduce inflation.
Christopher Waller of the Federal Reserve will speak at 8:35.
Financial futures markets are predicting there is a 50.5% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
Despite the newly more hawkish Federal Reserve, the fundamentals and technicals have improved for the 30-year U.S. Treasury bond futures.
GOLD
Stronger than expected U.S. economic data on Thursday pressured prices. Much of this week’s selling is linked to reduced expectations of Federal Reserve interest rate cuts. Wednesday’s release of the minutes from the May 1 Federal Open Market Committee meeting showed policymakers generally believed it could take longer than previously anticipated to gain greater confidence that inflation is moving towards its 2.0% target. Some officials indicated they had an inclination to hike interest rates if price pressures persist. This led to selling the non-interest bearing precious metal.
However, gold prices are higher today as investors seek it out for its safe-haven qualities In light of increasing geopolitical risks from a variety of hotspots.
SILVER
Silver prices fell below $30.5 per ounce. Recent pressure was triggered by the minutes from the latest Federal Open Market Committee meeting, which suggested that some officials were considering raising interest rates. Most policymakers, however, are in favor of keeping the benchmark policy rate steady.
The longer term supply-demand situation remains supportive to silver as it is on track for its fourth consecutive year of production deficit.
COPPER
In a volatile week of trading copper futures fell under $4.80 per pound, retreating from the record high of near $5.20 on May 20. Weaker demand in the near term and a more hawkish Federal Reserve are the main reasons for the selling pressure.
However, the longer term fundamentals remain supportive due to copper’s role in electrification in grid-scale energy storage and data-center infrastructure. This coincides with limited new supplies as miners opt to merger and acquisition activities instead of developing new projects.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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.
