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Concern on Health of Global Economy

STOCK INDEX FUTURES

Futures are lower due to concerns about the health of the global economy.

The Logistics Manager’s Index fell for a fifth consecutive month to hit a new record low of 45.6 in June of 2023.

The 9:00 central time May factory orders report is expected to show a 0.9% increase.

Traders will keep a close watch on the minutes from the Federal Open Market Committee‘s June 14 policy meeting, which will be released today at 1:00.

The FOMC minutes may contain further clues on the Fed’s plans, although Chair Powell has been reinforcing the view that interest rates will need to increase further this year.

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CURRENCY FUTURES

Producer prices in the euro area declined by 1.5% year-on-year in May 2023, following a downwardly revised 0.9% increase in April and compared to market expectations of a 1.3% decline. This marked the first month of decline in producer prices since December 2020.

Euro zone business activity slipped into contractionary territory last month. The HCOB’s final Composite Purchasing Managers’ Index fell to 49.9 in June from May’s 52.8.

That was below the 50 mark separating growth from contraction for the first time since December and was below a preliminary estimate for 50.3.

Growth in the U.K.’s private sector slowed sharply last month. The S&P Global/CIPS services Purchasing Managers’ Index for Britain declined to 53.7 in June from May’s 55.2, which was in line with a preliminary estimate.

INTEREST RATE MARKET FUTURES

Futures are mixed.

John Williams of the Federal Reserve will speak at 3:00.

Several portions of the U.S. Treasury yield curve have become even more inverted recently, which is a sign that investors are becoming increasingly worried about an economic slowdown.

Financial futures markets are predicting there is an 86% 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 14% chance that the fed funds rate will remain unchanged.

 

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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.

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