ADP Employment Report Shows Small Increase

STOCK INDEX FUTURES

S&P 500 futures are higher as oil prices declined on a report that Saudi Arabia was prepared to boost production.

The ADP National Employment Report showed private businesses hired 128,000 workers in May,  which is the least since the job losses in 2020, and well under forecasts of 300,000.

Jobless claims in the week ended May 28 were 200,000 when 211,000 were expected.

The 9:00 central time April factory orders report is anticipated to show a 0.8% increase.

Major stock index futures remain above downtrend lines.

CURRENCY FUTURES

The euro currency is higher despite news that annual producer price inflation in the euro area increased less than anticipated in April coming in at 37.2%. Although this a record high, it is under the predicted 38.5%.

The Bank of Canada on Wednesday increased its target for the overnight rate by half a percentage point from 1.0% to 1.5%, which marked the first time since the central bank adopted fixed-announcement dates in late 2000 that it delivered consecutive half-point rate hikes.

Interest rate differential expectations are neutral for the currency markets.

INTEREST RATE MARKET FUTURES

Yesterday, Federal Reserve Bank of St. Louis President James Bullard said financial markets have priced in a lot of central bank rate hikes. Mr. Bullard leaned against the idea that the central bank may pause on increases in the fall to access where the economy is.

This is in contrast to some degree to comments from Atlanta Federal Reserve leader Raphael Bostic who advanced the idea that there are some signs that the inflation surge may be moderating, and fears of recession are rising.

Federal Reserve speakers today are Lorie Logan at 11:00 and Loretta Mester at 12:00.

The Federal Reserve also officially began shrinking its $8.9 trillion balance sheet on Wednesday.

Financial futures markets are predicting there is a 98.5% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 1.5% probability that the  rate will increase by 75 basis points at the June 15 policy meeting.

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