Written Commentary
STOCK INDEX FUTURES
Prices are higher on limited news.
Traders are watching economic data closely for clues about the Federal Reserve’s path for raising interest rates.
A key test for markets will be Friday’s release of the May consumer price index. The closely watched inflation gauge is expected to increase 8.2% in May from a year earlier, according to economists. This estimate is lower than the April actual figure of up 8.3%. Excluding food and energy, price growth is anticipated to cool slightly to an annual rate of 5.9% in May from 6.2% the previous month.
There are no major economic releases scheduled for today.
Stock index futures remain in a 6-day congestion pattern.
Futures are performing better than the news would suggest, which is a sign of likely follow-through gains today.
CURRENCY FUTURES
Currency futures are narrowly mixed.
A survey of economists last week indicated efforts by European Central Bank hawks to secure an initial 50-basis point hike in interest rates will fail as policymakers will likely agree to a series of smaller increases. The next ECB meeting is scheduled for June 16.
The British pound is higher despite news that new car registrations in the U.K. declined 20.6% year-over-year to 124,394 units in May, which is the second weakest May since 1992.
The Bank of Japan governor indicated the bank must continue to support households feeling the effects of rising raw materials prices by retaining easy monetary policies.
Interest rate differential expectations are neutral for the currency markets.
INTEREST RATE MARKET FUTURES
Federal Reserve officials have indicated they plan to raise interest rates by half a percentage point at next week’s policy meeting, and by the same amount again in July.
Financial futures markets are predicting there is a 95.0% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 5.0% probability that the rate will increase by 75 basis points at the June 15 policy meeting.
The interest rate market futures appear to be making a bottom on the charts, and the fundamentals are improving.
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.
