Written Commentary
by Alan Bush, Senior Financial Economist
STOCK INDEX FUTURES
U.S. stock index futures are higher despite rising tensions between Washington and Beijing.
On the June S&P 500 futures charts there is a double top on the weekly chart and a triple top on the daily chart.
There are no major economic reports scheduled for today.
Overall, stock index futures continue to perform well for the news in recent weeks.
CURRENCY FUTURES
The euro currency is higher after Germany’s central bank published a positive report on the impact of the European Central Bank’s bond-buying program. This report came out two weeks after a German court demanded additional information about the program’s economic justification.
The British pound is lower after a report showed retail sales in the U.K. fell by a record 18.1% in April. The volume of retail sales declined 22.6% year-over-year from April 2019.
Consumer confidence in the U.K. fell to the lowest level in a decade in May compared with the end of April.
The Bank of Japan announced no change in its policies. However, officials did announce the creation of a new special program amounting to approximately 75 trillion yen to support corporate financing.
INTEREST RATE MARKET FUTURES
In light of increased U.S.-China tensions flight to quality buying is coming into the market.
The Federal Reserve’s balance sheet increased to $7.09 trillion for the week ending in May 20, which is up from $6.98 trillion in the previous week.
In keeping with the global trend of central banks becoming more accommodative, the Reserve Bank of India cut its key lending rate in an unscheduled move to support the economy. The RBI’s monetary policy committee reduced its repurchase agreement rate by 40 basis points to 4.00% from 4.40%.
The next Federal Open Market Committee meeting is scheduled for June 9-10. Currently there is a 98.6% probability that the FOMC will leave its fed funds rate unchanged at zero to 25 basis points.
The thirty-year Treasury bond futures are in a broadly based congestion pattern, as the main fundamental influences are offsetting.
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