30Yr Treasury Bonds at Three-Week High

STOCK INDEX FUTURES

Stock index futures continued lower today in response to yesterday’s disappointing corporate earnings reports, especially in the retail sector.

Jobless claims in the week ended May 15 were 218,000 when 197,000 were expected.

The May Philadelphia Federal Reserve manufacturing index was 2.6 when 16.1 was anticipated. The index was 17.6 in April.

The 9:00 April existing homes sales report is estimated to show 5.65 million and the 9:00 April leading indicators report is predicted to show an increase of 0.1%.

CURRENCY FUTURES

The euro currency is higher on news that European Central bank policymakers expressed concerns over high inflation and agreed that a gradual normalization of monetary policy should continue, according to minutes from the last ECB meeting in April. The central bank also reinforced the idea that net asset purchases under the APP should be concluded in the third quarter.

Gains in the euro were limited by news that construction output in the euro area increased 3.3% year-on-year in March of 2022, easing from a downwardly revised 8.9% advance in the previous month. This was the softest rate of growth in construction activity since last December.

The British pound is higher on news that the Confederation of British Industry’s order book balance improved to 26 in May of 2022, matching previous records in March and November, from 14 in April.

The Japanese yen is higher despite news that Japan’s exports increased less than expected in April. Exports increased 12.5% from a year earlier in April, which compares to the 13.9% increase anticipated by economists.

The Australian dollar advanced on news that Australia’s unemployment rate in April came in at its lowest level since 1974.

INTEREST RATE MARKET FUTURES

The 30-year Treasury bond futures advanced to a three-week high.

Financial futures markets are predicting there is a 93.1% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 6.9% 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.

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