Dollar Higher on Hawkish Fed

CURRENCY FUTURES

The U.S. dollar index is higher due to hawkish comments from Federal Reserve officials.

The HCOB Flash Manufacturing PMI for Germany fell to 42.9 in May of 2023 from 44.5 in April when 45 was forecast. This is the biggest drop in the manufacturing sector since May of 2020.

The S&P Global/CIPS U.K. Composite PMI fell to 53.9 in May 2023 from April’s 12-month high of 54.9. The consensus expectation was 54.6.

STOCK INDEX FUTURES

Stock index futures are lower.

Although a deal on the government debt has not been reached yet negotiations will continue during the week.

The 8:45 central time May manufacturing PMI is expected to be 50.0.

The 9:00 April new home sales report is anticipated to be 670,000 and the 9:00 May Richmond Federal Reserve manufacturing index is predicted to be negative 8.0.

Stock index futures have performed well very in 2023 despite a variety of bearish news.

INTEREST RATE MARKET FUTURES

Futures are lower as several Fed officials raised expectations for prolonged higher interest rates.

Neel Kashkari said interest rates may have to increase from here and that he does not want to say that they are done hiking rates. However, he stated that the Federal Reserve may not raise rates as aggressively.

The yield on the U.S. 10-year Treasury note increased to 3.75%, which is the highest since mid-March, as investors monitor the debt ceiling impasse and the monetary policy outlook.

Lorrie Logan of the Federal Reserve will speak at 8:00.

Financial futures markets are predicting there is an 82% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its June 14 policy meeting, and there is an 18% chance of a 25 basis point increase.

 

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