Written Commentary
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June 1, 2023
STOCK INDEX FUTURES
S&P 500 futures advanced to an eleven week high due to better than expected corporate earnings reports.
Housing starts in March were 1.420 million when 1.400 million were expected, and building permits in March were 1.413 million when 1.441 million were anticipated.
Stock index futures have performed very well considering recent hawkish comments from Federal Reserve officials.
CURRENCY FUTURES
The U.S. dollar index declined despite recent hawkish comments from Federal Reserve officials.
The euro currency is higher despite news that the ZEW Indicator of Economic Sentiment for Germany declined for a second month to 4.1 in April of 2023. This is the lowest this year and well below market predictions of 15.3.
Strong U.K. pay growth is boosting probabilities of a Bank of England interest rate hike next month, despite an unexpected increase in joblessness. The Office for National Statistics said the unemployment rate edged up to 3.8%, which is highest level since the second quarter of 2022, rather than remaining at 3.7%, as estimated by economists.
Annual pay growth for the three months to January was revised higher to 5.9% and held at that level for the three months to February, which was above forecast.
The British pound is higher despite news that more companies in England and Wales entered insolvency during March than at any point since monthly records started three years ago, according to official data that showed a 16% increase on a year earlier. The Insolvency Service Agency reported 2,457 corporate insolvencies last month, which is up from 1,784 in February.
INTEREST RATE MARKET FUTURES
Michelle Bowman of the Federal Reserve will speak at 12:00 central time.
Underlying support for futures remains due to the belief that central banks will not be able to keep raising interest rates much longer.
Markets are currently pricing in a 25 basis point rate increase at the Fed’s May 3 policy meeting. However, easier credit conditions from the Federal Reserve are likely later this year.
The technicals and fundamentals remain supportive.
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