Written Commentary
STOCK INDEX FUTURES
Stock index futures were lower in the overnight trade but were able to recover to mixed.
The May New York Federal Reserve manufacturing index was negative 11.6 when positive 15.0 was expected.
On Thursday of last week a major downside chart objective was hit in the S&P 500 futures using the midway congestion pattern, measured move technique.
CURRENCY FUTURES
The U.S. dollar index is a little lower but remains near a 20-year high.
Interest rate differential expectations suggest higher prices are likely for the greenback.
The European Commission revised the EU’s growth outlook downwards, and the forecast for inflation upward.
Wholesale prices in Germany increased 23.8% year-on-year in April, which breaks a record rate for a third consecutive month.
The euro area recorded a €16.4 billion trade gap in March, compared to a €22.5 billion surplus a year earlier.
Now is a good time to cover all shorts in the Japanese yen now that interest rate differential expectations are becoming less bearish on the yen.
Housing starts in Canada jumped 8.0% over a month to 267,330 units in April, which is above market expectations of 246,400 units, according to the Canada Mortgage and Housing Corporation.
INTEREST RATE MARKET FUTURES
Futures firmed when the bullish, much weaker than anticipated New York Federal Reserve manufacturing index was released.
Financial futures markets are predicting there is an 87.2% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 12.8% probability that the rate will increase by 75 basis points at the June 15 policy meeting.
Now is a good time to cover short positions in the interest rate market futures, since there are indications that the rate of inflation is peaking.
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