May CPI Lower Than Expected
STOCK INDEX FUTURES
U.S. stock index futures are higher with NASDAQ futures advancing to a new record high of over 10,000.
The main events today will be the 1:00 central time release of the statement from the Federal Open Market Committee and the 1:30 virtual press conference from Federal Reserve Chairman Jerome Powell.
Applications for loans to purchase a home increased 5.0% last week from the previous week and were 13% higher than a year ago, according to the Mortgage Bankers Association.
The May consumer price index was down 0.1% when unchanged was expected.
The June Atlanta Federal Reserve business inflation expectations report will be released at 9:00 central time. The report last month showed inflation at 1.5%.
Stock index futures continue to show positive technical action and have been performing well in spite of a variety of geopolitical concerns.
Much of the trade appears to be evening up ahead of the statement from the FOMC.
The Japanese yen is higher despite news that Japan’s April core machinery orders fell 12.0% on the month when a decline of 8.6% was anticipated.
The Australian dollar is higher despite news that the nine weeks of consecutive gains in Australian consumer confidence has ended, with confidence falling 1.3% last week.
INTEREST RATE MARKET FUTURES
According to financial futures markets there is an 84.3% probability that the FOMC will leave its fed funds rate unchanged at zero to 25 basis points. Also, there is a 15.7% probability of a 25-basis point increase.
The Fed cut its target range for short-term interest rates to 0-0.25% in March.
Fed Chair Powell will likely acknowledge the increase in nonfarm payrolls, but still deliver a dovish on balance statement.
In addition, Powell could clarify the Fed’s views on its bond-buying programs and its long-term intentions on interest rates.
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