Interest Rate Futures Appear To Be Bottoming
STOCK INDEX FUTURES
Global stocks and U.S. equity futures are higher in response to news that the Chinese central bank cut a key interest rate.
There are no major economic reports scheduled for today. However, all four of yesterday’s major economic reports in the U.S. came in on the weak side, including the April leading indicators, which were down 0.3% when a 0.1% increase was expected.
The U.S. dollar is higher, and the euro currency is lower.
The British pound is lower despite news that retail sales in the U.K. unexpectedly increased 1.4% month-to-month in April, rebounding from declines in the previous two months and beating market forecasts of down 0.2%.
The Japanese yen is lower in spite of news that consumer prices in Japan increased at a pace above 2.0% for the first time in more than 13 years. Japan’s consumer prices rose by 2.5% year-over-year in April 2022, after a 1.2% gain a month earlier.
Despite this report it is likely that the Bank of Japan will maintain its policy of keeping interest rates near zero.
INTEREST RATE MARKET FUTURES
The 30-year Treasury bond futures advanced to a three-week high yesterday.
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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