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.

CURRENCY FUTURES

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.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now