Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
STOCK INDEX FUTURES
Stock index futures are mixed.
The April producer price index increased 0.2% when up 0.3% was expected, and the producer price index excluding food and energy increased 0.2% as anticipated.
Jobless claims in the week ended May 6 were 264,000 when 245,000 were estimated.
Stock index futures have performed very well recently.
CURRENCY FUTURES
The U.S. dollar index gave back some of its overnight gains when the U.S. producer price index report was released.
Euro zone consumers increased their inflation expectations in March. The median respondent in the latest Consumer Expectation Survey saw prices growing 5.0% in the coming 12 months, which is up from 4.6% in the previous survey taken in February. Longer-term expectations also increased sharply, with inflation three years ahead seen at 2.9% after a 2.4% reading a month ago.
The Bank of England hiked its key interest rate for the 12th consecutive time and indicated more increases are possible as it released less gloomy forecasts for the U.K. economy. The central bank raised the rate to 4.50% from 4.25%. The key rate is now at its highest level since October 2008.
At today’s policy meeting the BOE signaled it might raise interest rates again if there are indications that inflation is likely to remain high for longer than it now predicts.
The BOE’s latest rate increase was the same in size as those announced by the Federal Reserve and the European Central Bank last week. However, the three central banks have sent different signals about their likely future monetary policy paths.
Federal Reserve officials signaled they may be done raising interest rates, while the ECB made it clear that it is not ready to pause its campaign to fight high inflation.
A gauge of Japan’s service sector sentiment increased 1.3 points from the prior month to 54.6 in April 2023, topping a market consensus of 54.1, the Economy Watchers’ Survey showed. It was the highest reading since December 2021 and the third consecutive period of improvement.
Longer term, interest rate differentials suggest lower prices for the U.S. dollar and higher prices for the euro currency.
INTEREST RATE MARKET FUTURES
Futures are higher in light of the release of the smaller than predicted increase in the month-on-month producer price index.
Christopher Waller of the Federal Reserve will speak at 9:15 central time.
The Treasury will auction 30-year bonds today.
The Federal Open Market Committee will probably keep its fed funds rate unchanged at its June 14 policy meeting.
The technicals and fundamentals remain supportive to futures.
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