Written Commentary
INTEREST RATE MARKET FUTURES
Other Federal Reserve speakers today are Lisa Cook at 9:00, Philip Jefferson at 9:00, Austan Goolsbee at 12:25 and Loretta Mester at 3:00.
Financial futures markets are predicting there is a 79% 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 21% chance that the fed funds rate will remain unchanged.
Last week the Federal Open Market Committee indicated 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.
STOCK INDEX FUTURES
Stock index futures are lower.
Federal Reserve Chair Jerome Powell said in his prepared testimony the central bank was likely to increase interest rates in coming months after officials held them unchanged last week.
According to just released prepared remarks, Powell will tell lawmakers there is still “a long way to go” to cool inflation and interest rates are anticipated to increase further this year, reiterating his comments from last week.
Federal Reserve Chair Jerome Powell will testify before the House of Representatives Financial Services Committee at 9:00 central time today, and before the Senate Banking Committee tomorrow at 9:00 as part of his semi-annual report on U.S. monetary policy to lawmakers.
Futures continue to overperform the news.
CURRENCY FUTURES
The German economy will contract more than previously predicted this year, according to the Ifo Institute. Ifo’s head of economic forecasts, said “The German economy is only very slowly working its way out of the recession.”
German gross domestic product is expected to decline by 0.4% this year, which is more than the 0.1% forecast by the Ifo Institute in March.
The headline inflation rate in the U.K. was unchanged at 8.7% last month, compared to predictions it would slow to 8.4%, and coming above expectations for a fourth month. The Bank of England is expected to raise rates by at least 25 basis points tomorrow, with traders now seeing a 45% probability it will deliver a bigger 50 basis point hike.
Business morale at large Japanese manufacturers edged higher in June, remaining in positive territory for a second straight month.
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.
