Stock Index Futures Higher Despite Recession

STOCK INDEX FUTURES

Stock index futures are higher despite yesterday’s report of negative second quarter growth in GDP, which puts the U.S. economy in recession.

Personal income in June increased 0.6% when up 0.5% was expected.

The 8:45 central time July Chicago PMI is anticipated to be 56.

The 9:00 July consumer sentiment index is estimated to be 51.1.

Futures have recently been supported by the belief that the Federal Open Market Committee is becoming less hawkish.

Also, the technical aspects are becoming more friendly.

CURRENCY FUTURES

The euro currency firmed on news that the euro zone economy expanded 0.7% on the quarter in the three months to June of 2022, beating market forecasts of a 0.2% gain.

Euro zone Inflation increased to a record high of 8.9% in July, hitting its highest level ever.    Economists had forecast euro zone inflation to be unchanged at 8.6% in July.

The long term trend for the euro is lower and the long term trend for the U.S. dollar is higher.

The British pound is lower on news that U.K. business confidence declined.

Canada’s May GDP was unchanged from April.

INTEREST RATE MARKET FUTURES

Currently the Federal Reserve’s focus is clearly on inflation, while a slowing economy will be problem for the Fed to deal with later.

There is a 70.0% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 30.0% probability that the rate will increase by 75 basis points at the September 21 policy meeting.

Financial futures markets are now predicting the Fed could return to being accommodative late in 2023.

Higher prices are likely across the board for the interest rate market futures as the U.S. economy is likely to continue to weaken.

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